If You Put $400 into a Bank Account Today and It

question 371

Multiple Choice

If you put $400 into a bank account today and it promises to pay 5% interest for 6 years, how much is in the account at the end of the six years?

• A) \[\$ 400 \times 6 \times ( 1.05 )\]
• B)
• \[\$ 400 \times ( 1.05 ) ^ { 6 }\]
• C)
• \[\$ 400 \times ( 1.30 )\]
• D)
• \[\$ 400 \times \left( 1 + .05 ^ { 6 } \right)\]

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Definitions:

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Selling Price

Selling Price is the amount of money that a seller charges for a product or service.

Economic Profits

The discrepancy between what a business earns in total revenue versus the sum of its explicit and implicit expenditures.

Monopolistically Competitive

A market structure where many companies sell products that are similar but not identical, leading to competition.