Question

A principal of $5,350 is placed in an account that earns 3.5% interest. If the interest is compounded annually, how much money will be in the account at the end of 4 years?

a.
$5,760.06
b.
$5,537.25
c.
$6,099.00
d.
$6,139.25


Please select the best answer from the choices provided

A
B
C
D

Answer 1

Option D.
`\$6,139.25`

Explanation:

we know that

The compound interest formula is equal to

`A=P(1+(r)/(n))^(nt)`

where

A is the Final Investment Value

P is the Principal amount of money to be invested

r is the rate of interest in decimal

t is Number of Time Periods

n is the number of times interest is compounded per year

in this problem we have

`t=4\ years\\ P=\$5,350\\ r=0.035\\n=1`

substitute in the formula above

`A=\$5,350(1+(0.035)/(1))^(1*4)`

`A=\$5,350(1.035)^(4)=\$6,139.25`