Multiple choice

If $1000$ dollars is deposited in a bank account for $4$ years at $8$% per annum. Calculate interest using compound interest formula.

  1. $340.5$ dollars
  2. $350.5$ dollars
  3. $360.5$ dollars
  4. $370.5$ dollars
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C Correct answer
Explanation

CI = P * (1 + r/100)^n - P. CI = 1000 * (1 + 0.08)^4 - 1000 = 1000 * (1.08)^4 - 1000 = 1000 * 1.36048896 - 1000 = 360.49.

AI explanation

Using the compound interest formula to find the total amount, we calculate 1000 times (1 plus 8 divided by 100) raised to the power of 4, which equals 1000 times 1.36048896, giving a total of 1360.49 dollars. To find the interest, we subtract the original principal, so 1360.49 minus 1000 gives 360.5 dollars.

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