Question

The expression for the amount of money earned on a savings account compounded quarterly is given by the expression x(1.1)^4t, where x represents the principal and t is the time in years since the principal was invested. Which expression is the equivalent form of the given expression and shows the amount earned when the interest is compounded half- yearly?

A. x(1.4641)^t

B. x(1.4641)^2t

C. x(1.21)^t

D. x(1.21)^2t

Answer 1

Answer: The answer is x(1.21)^2t

Explanation:

Answer 2

Selection D is the equivalent form of the given expression.


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The nominal annual interest rate in this problem is 40%. If it were compounded half-yearly, the formula would be x(1.2)^(2t) or x(1.44)^t. Apparently, this problem is more concerned with the equivalent form of the expression than it is with half-yearly compounding.