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How much money will you have after 10 years if you invest $2,500 into an account that pays 12% per year, compounded annually? (Remember, the formula is A = P(1 + r)t.)

A. $7,764.62
B. $8,784.14
C. $7,674.68
D. $7,846.07

User Gwintrob
by
8.5k points

2 Answers

5 votes

Answer:

Option A

Explanation:

We must use the compound interest formula:


A = P(1 + r)^t

Where

P is the initial amount = 2500

r is the annual interest rate =0.12

t is time in years = 10

A is the final amount

Then we substitute these values in the formula:


A = P(1 + r)^t\\\\A = 2500(1+0.12)^10\\\\A = 7,764.62

User Erin Heyming
by
8.6k points
3 votes

Answer:

A. $7,764.62

Explanation:

The amount you will have after 10 years if you invest $2,500 into an account that pays 12% per year, compounded annually is given by


A=P(1+r\%)^t

where
t=10 years


r\%=0.12

and P=$2,500

We substitute these values into the formula to obtain;


A=2500(1+0.12)^(10)

This will give us;


A=2500(1.12)^(10)


A=7764.6205

We round to the nearest hundredth to obtain;


A=7,764.62

The correct choice is A.

User Felipsmartins
by
7.9k points