Multiple choice

Steve deposited $100 to open a savings account. If there are no other transactions in the account, what amount of money would the account accrue in 6 months after opening the account? (1) The interest rate is 4%. (2) Interest is compounded quarterly.

  1. Statement (1) ALONE is sufficient, but statement (2) alone is not sufficient

  2. Statement (2) ALONE is sufficient, but statement (1) alone is not sufficient

  3. BOTH statements TOGETHER are sufficient, but NEITHER statement ALONE is sufficient

  4. EACH statement ALONE is sufficient.

  5. Statements (1) and (2) TOGETHER are NOT sufficient
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

To calculate the accrued amount, we need both the interest rate (Statement 1) and the compounding frequency (Statement 2) to determine the effective interest over 6 months.

AI explanation

To find the final amount under compound interest, both the interest rate and the compounding frequency are strictly required. Statement 1 provides the interest rate of 4% but lacks the compounding frequency, while statement 2 provides the quarterly compounding frequency but lacks the interest rate. Using both statements together provides all necessary variables to calculate the accrued amount.

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