Multiple choice

Clara invested \$100 in an investment scheme at certain interest compounded annually. She received \$400 after 4 years. Had she invested $500 at half the rate of interest for 3 years at simple interest, then the interest would have been

  1. $310.5
  2. $420.5
  3. $490.5
  4. $590.5
  5. $600.5
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A Correct answer
AI explanation

Using the compound interest formula, 100 * (1 + R)^4 = 400, so (1 + R)^4 = 4. Solving for R gives 1 + R = 1.4142, so R = 0.4142 or 41.42%. The simple interest on \$500 at half this rate, which is 20.71%, for 3 years is calculated as 500 * 0.2071 * 3 = \$310.5.

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