Question

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Answer 1

The value 0.031 represents the interest rat, which means the annual compounded interest rate is 3.1%

First option

Explanation:

The general equation for amount accrued A with a principal P at an annual compound interest rate of i%(r/100 in decimal) compounded n times a year for t years is given by

`A = P\left(1 + (r)/(n)\right)^(nt)`

Here r = i/100 which is a decimal

Looking at the specific equation

`A = 2400\left(1 + (0.031)/(4)\right)^(4t)`

we can see that P = 2440, the initial investment

0.031 is the annual interest rate in decimal

Expressed as percentage that would be 0.031 x 100 = 3.1% per year

So the correct answer is the first option which states
The value 0.031 represents the interest rat, which means the annual compounded interest rate is 3.1%