Question

Wilson wants to deposit $150 into an account earning 4% for the next three years. What type of computation would he use to determine the amount he will have?

a) Compound interest
b) Simple interest
c) Linear regression
d) Financial analysis

Answer 1

The type of computation would he use to determine the amount he will have (a) Compound interest. The correct option is a) Compound interest.

Step-by-step explanation:

Wilson would use compound interest to determine the amount he will have after depositing $150 into an account earning 4% for the next three years. Compound interest takes into account not only the initial principal amount but also the interest that accrues on it over time, allowing for the calculation of the total amount at the end of the specified period.

Compound interest is a powerful financial calculation method where interest is added to the initial principal, and subsequent interest is calculated based on the updated amount. In Wilson's case, this would result in a higher final amount than simple interest, as interest is not only earned on the initial deposit but also on the accumulated interest from previous periods. Option A is correct.

Answer 2

The type of computation would he use to determine the amount he will have (a) Compound interest.

Step-by-step explanation:

Wilson would use compound interest to determine the amount he will have after depositing $150 into an account earning 4% for the next three years. Compound interest takes into account not only the initial principal amount but also the interest that accrues on it over time, allowing for the calculation of the total amount at the end of the specified period.

Compound interest is a powerful financial calculation method where interest is added to the initial principal, and subsequent interest is calculated based on the updated amount. In Wilson's case, this would result in a higher final amount than simple interest, as interest is not only earned on the initial deposit but also on the accumulated interest from previous periods.

Option A is correct.