Question

A $4,000.00 principal earns 5% interest, compounded annually. After 4 years, what is the balance in the account?

$500,000.00
$4,862.03
$4,600.00
$20,250.00

24.
A $6,000.00 principal earns 8% interest, compounded semiannually. After 35 years, what is the balance in the account?

$22,800.00
$39,600.00
$88,712.07
$93,429.71

25.
A tractor costs $15,450.00 and depreciates in value by 14% per year. How much will the tractor be worth after 3 years? $22,889.85
$15,408.00
$8,451.28
$9,827.07

Answer 1

23: B

24: D

25: C

Explanation

The test said it was correct

Answer 2

First question:
interest rate is 5% annually. After 4 years relative value of interest will be 1.05^4
Now we multiply that with starting funds and get
4000* 1.05^4 = 4862.03

Second question:
Because interest is 8% semiannually that means that after 35 years relative value of interest will be 1.04^(35*2)
6000*1.04^70 = 93,429.71

Third question:
after first year tractor's value will be 0.86*15450. After 3 years its value will be:
(0.86)^3*15,450 = 9,827.07