Answer:
a. Mariah’s estimate of the time is too low
Step-by-step explanation:
To answer this question, we are going to need to input the values in the question into the compound interest formula:
[tex]A=P(1+\frac{r}{n} )^{nt}[/tex]
P = initial balance
r = interest rate (decimal)
n = number of times compounded annually
t = time
First, change 3.75% into a decimal:
3.75% -> [tex]\frac{3.75}{100}[/tex] -> 0.0375
Since the interest is compounded quarterly, we will use 4 for n. Lets plug in the values now:
[tex]A=5,270(1+\frac{0.0375}{4})^{4(9)}[/tex]
[tex]A=7,373.98[/tex]
Mariah's estimate of the time is too low. Your answer is A.
