If R100 is placed in an account that earns a simple 4 percent, compounded quarterly, what will it be worth in 5 years?

Question

Quizplus · Accepted Answer

Using the formula for compound interest, we get:

A = P ( 1 + r/n )^(nt)

where
A = final amount 
P = initial principal balance (R100)
r = annual interest rate (4%)
n = number of times interest is compounded per year (4, for quarterly compounding)
t = time in years (5)

Plugging in the numbers, we get:

A = 100(1 + 0.04/4)^(4*5) 
A = R122.02

Therefore, the correct answer is A.

If R100 Is Placed in an Account That Earns a Simple