Multiple choice

Jeff invested £39553 at the rate of 2.5% per annum. Find the amount he will get if the interest is compounded quarterly for 6 years.

  1. £45932.58

  2. £44814.5

  3. £43945.28

  4. £43546.25
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A Correct answer
Explanation

Principal P = 39553. Rate r = 2.5% per annum = 0.625% per quarter. Time n = 6 years = 24 quarters. Amount = P(1 + r/100)^n = 39553 * (1 + 0.00625)^24 = 39553 * (1.00625)^24. (1.00625)^24 is approx 1.16129. 39553 * 1.16129 = 45932.58.

AI explanation

Using the quarterly compounding formula A = P(1 + R/400)^(4n), we substitute the given values to find the amount: A = 39553(1 + 2.5/400)^(24). This evaluates to 39553 multiplied by (1.00625)^24. Performing the arithmetic gives a final amount of 45932.58.

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