PSAT Math Multiple-Choice Question 73: Answer and Explanation

Question: 73

If interest deposits are made monthly into an account with a beginning balance of $250, supposing no withdrawals are made from the account, the balance B of an account with an annual interest rate of 5% after t years can be computed using the equation below.

Which of the following describes what the quantity represents in the equation?

• A. The amount of money deposited into an account with balance B during a given month
• B. The amount of money in an account with balance B after a monthly interest deposit is made
• C. The percentage of the starting balance B added during a monthly interest deposit
• D. The number of months over which interest payments will be made in a year

Correct Answer: C

Explanation:

C

The question asks for the meaning of an expression in context. Start by reading the full question, which asks for the meaning of the expression . Then label the parts of the equation with the information given. The question states that B is the balance of the account, and that t is the time in years. It also says that 250 is the beginning balance, and that the account has an annual interest rate of 5%, and that interest deposits are made to the account monthly. The 0.05 must have something to do with the 5% interest rate, and the 12 must have something to do with the 12 months in a year. Next, use Process of Elimination to get rid of answer choices that are not consistent with the labels. Eliminate (A) because 0.05 is the interest rate; it represents a percentage and cannot be the actual amount of money that is deposited. Eliminate (B) because ≈ 0.004; this is less than 1 cent. The beginning balance was $250, and it doesn't make sense that there would be less money in the account after a deposit was made. Choice (C) refers to the percentage of the balance added during a monthly interest deposit, so keep (C). Eliminate (D) because 0.004 is too small to be a number of months. The correct answer is (C).