Question

Albert invested the amount of $8,000 in a fixed deposit for 2 years at a compound interest rate of 5% per annum. How much will Albert get on the maturity of the fixed deposit?

A. $8510
B. $8620
C. $8730
D.$8820

Answer 1

Option D.$8820

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=2\ years\\ P=\$8,000\\ r=5\%=5/100=0.05\\n=1`

substitute in the formula above

`A=8,000(1+(0.05)/(1))^(1*2)`

`A=8,000(1.05)^(2)`

`A=\$8,820`