Question

The table below shows the future value of a certificate of deposit (CD) after x years Eric states the applied interest is simple interest true or false?

Answer 1

Answer: False, or B. I wanted to confirm that the person above it correct, I checked on the test.

Explanation:

Answer 2

Option B.

Explanation:

Eric states the applied interest is simple interest. We need to check whether the this statement is true or false.

In simple interest, the amount of deposit increased at a constant rate. It means the difference between future values of any two consecutive years will same.

Difference between future values of first two years.

`d_1=210.13-205.00=5.13`

Difference between future values of 2nd and 3rd year is

`d_2=215.38-210.13=5.25`

Since d₁≠d₂, therefore, the given statement is false.

Thus, the correct option is B.