Multiple choice

John deposited $\ $10,000$ to open a new savings account that earned $4$ percent annual interest, compounded quarterly. If there were no other transactions in the account, what was the amount of money in John's account $6$ months after the account was opened?

  1. $\ $10,100$
  2. $\ $10,101$
  3. $\ $10,200$
  4. $\ $10,201$
  5. $\ $10,400$
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The interest is 4% annually, compounded quarterly, so the quarterly rate is 1%. Over 6 months (2 quarters), the amount is 10000 * (1.01)^2 = 10000 * 1.0201 = 10201.

AI explanation

For a 4% annual interest rate compounded quarterly, the rate per quarter is 1%. Over 6 months, there are exactly two quarters, so we apply the compound interest formula A = 10000 times (1.01) squared. The calculation is 10000 times 1.0201, which gives $10,201.

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