Question: What is the total amount after 3 years if $1000 is invested at a compound interest rate of 4% per annum?

Options:

1. $1124.86
2. $1100.00
3. $1150.00
4. $1200.00

Correct Answer: $1124.86

Solution:

Amount = P(1 + r)^n = 1000(1 + 0.04)^3 = 1000(1.124864) = $1124.86.