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100 points for $49 worth of Veritas practice GMATs FREE VERITAS PRACTICE GMAT EXAMS Earn 10 Points Per Post Earn 10 Points Per Thanks Earn 10 Points Per Upvote ## If $$\1$$ was invested at $$4\%$$ interest, compounded quarterly, the total value of the investment, in dollars, at the ##### This topic has expert replies Moderator Posts: 779 Joined: 29 Oct 2017 Thanked: 1 times Followed by:3 members ### If $$\1$$ was invested at $$4\%$$ interest, compounded quarterly, the total value of the investment, in dollars, at the by M7MBA » Wed Jun 24, 2020 6:08 am ## Timer 00:00 ## Your Answer A B C D E ## Global Stats If $$\1$$ was invested at $$4\%$$ interest, compounded quarterly, the total value of the investment, in dollars, at the end of three years would be A. $$(1.4)^3$$ B. $$(1.04)^{12}$$ C. $$(1.04)^3$$ D. $$(1.01)^{12}$$ E. $$(1.01)^3$$ [spoiler]OA=D[/spoiler] Source: Princeton Review Legendary Member Posts: 1846 Joined: 02 Mar 2018 Followed by:3 members ### Re: If $$\1$$ was invested at $$4\%$$ interest, compounded quarterly, the total value of the investment, in dollars, at by deloitte247 » Sat Jun 27, 2020 2:05 pm Given that: principal =$1, interest = 4%
Time = 3 years, n = 4 (compounded quarter)
$$A=P\cdot\left(1+\frac{r}{n}\right)^{\left(t\cdot n\right)}$$
$$A=1\cdot\left(1+\frac{4}{4}\div100\right)^{\left(3\cdot4\right)}$$
$$A=\left(1+1\cdot\frac{1}{100}\right)^{\left(12\right)}$$
$$A=\left(1+0.01\right)^{\left(12\right)}$$
$$A=\left(1.01\right)^{\left(12\right)}$$
$$Answer\ =\ D$$

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### Re: If $$\1$$ was invested at $$4\%$$ interest, compounded quarterly, the total value of the investment, in dollars, at

by Scott@TargetTestPrep » Thu Jul 02, 2020 3:47 pm
M7MBA wrote:
Wed Jun 24, 2020 6:08 am
If $$\1$$ was invested at $$4\%$$ interest, compounded quarterly, the total value of the investment, in dollars, at the end of three years would be

A. $$(1.4)^3$$
B. $$(1.04)^{12}$$
C. $$(1.04)^3$$
D. $$(1.01)^{12}$$
E. $$(1.01)^3$$

[spoiler]OA=D[/spoiler]
Solution:

We can use the compound interest formula:

Future value = (present value) x (1 + rate/n)^(tn), in which rate = the annual interest rate converted to a decimal, n = the number of compounding periods per year, and t = the number of years of the investment.

Future value = 1(1 + 0.4/4)^(3 x 4) = (1.01)^12