Question

Porsha calculates the amount of money she will have at the end of 6 years on a $5,000 investment earning 3.75% interest compounded quarterly. She writes the following expression:

5,000 (1 + 0.0375) superscript 24
Which of the following statements about Porsha's expression is true?
a.
Porsha's expression is correct.
b.
Porsha's expression should have 1 + 0.009375 in the parentheses.
c.
Porsha's expression should have an exponent of 6, not 24.
d.
Porsha's expression should have both 1 + 0.009375 in the parentheses and an exponent of 6.

Answer 1

Porsha's expression should have an exponent of 6, not 24.

The correct option is c.

Step-by-step explanation:

The correct statement about Porsha's expression is c. Porsha's expression should have an exponent of 6, not 24.

When calculating compound interest, the exponent should represent the number of compounding periods over the given time period.

In this case, the interest is compounded quarterly, which means there are 4 compounding periods in a year. Since the investment is for 6 years, the correct expression should be:

$5,000 * (1 + 0.0375)^6