Interest Rate: 4% monthly Starting Balance: 124 Time Passed: 4 months How much interest has accrued if calculated as compound interest? What is the new total balance?\nOptions:\n(A) 21 & 145\n(B) 22 & 146\n(C) 23 & 145\n(D) 20 & 140\n(E) None Stream of consciousness first, then make a decision:
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Compound Interest: Total Balance = P(1 + R)T P = principle = starting balance = $124 R = interest rate = 4% T = time = 4 years Total balance = principle × (1 + interest rate)time = 124 × (1 + (4 / 100))4 = 145 Interest accrued = total balance - starting balance = 145 - 124 = 21
Thus, the answer is (A).
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