Calculate the Future Amounts You Would Have If $3,000 Were

question 240

Multiple Choice

Calculate the future amounts you would have if $3,000 were invested at 12% for 4 years with simple interest and if it were invested with annual compounding. What is the difference between the two to the nearest cent, and does compound interest yield more or less than simple interest?

• A) at simple interest, $4,440 with annual compounding, $4,720.56
• Difference, $280.56 less;
• B) at simple interest, $4,440 with annual compounding, $4,721
• Difference, $281 less;
• C) at simple interest, $4,440 with annual compounding, $4,720.56
• Difference, $280.56 more;
• D) at simple interest, $4,440 with annual compounding, $4,721
• Difference, $281 more;
• E) at simple interest, $4,720.56 with annual compounding, $4,440
• Difference, $280.56 less;

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Definitions:

Substitution

A chemical reaction in which an atom or group of atoms in a molecule is replaced by another atom or group.

Methanol/Water

A mixture of methanol and water, often used as a solvent or reactant in various chemical reactions.

Phenyl-Ethylamine

A natural monoamine alkaloid often associated with mood elevation and love due to its presence in chocolate.

Dimethylcyclopentane

A chemical compound consisting of a cyclopentane ring with two methyl groups attached to it.