BUSINESS, FUR1 2004 VCAA 7 MC

Binnie invests `$12 000` for `5` years at an interest rate of `text(3.6%)` per annum, compounding annually.
The amount of interest she earns during the third year of the investment is closest to

A. $463.66

B. $470.41

C. $480.36

D. $1 343.22

E. $1 823.57

Show Answers Only

`A`

Show Worked Solution

`text(Using)\ \ A = PR^n`

`text(After 2 years,)\ \ P = 12000, R = 1.036, n = 2`

`:.\ A`	`= (12000)(1.036)^2`
	`= $12879.552`

`:.\ text(Interest in 3)^text(rd)\ text(year)`	`= 12879.552 xx text(3.6%)`
	`= $463.664…`
	`~~ $463.66`

`=> A`