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Compound Interest, SMB-003 MC

At the pump, one litre of diesel fuel cost 98 cents in NSW in 2003. The value of diesel fuel has increased by 4% per annum since then. 

Which expression gives the value, in cents, of one litre of diesel at the pump in 2023?  

  1. `98 xx 20 xx 1.04` 
  2. `98(1 + 0.04)^20`
  3. `98 xx 1.04 xx 20`
  4. `98 xx 20 xx 0.04`
Show Answers Only

`B`

Show Worked Solution

`r =\ text(4%)\ = 0.04`

`n = 20\ text(years)`

`text{Using}\ \ FV=PV(1+r)^n`

`text{Value in 2023} =98(1 + 0.04)^20`

`=>  B`