Question

Directions: Use the following formula to assist you with questions 13 and 14.

Compound interest formula


Amanda invests $1,000. What will be the value of her investment after four years and nine months, if the interest rate is 3.5% compounded annually? (5 points)

$1,183.61

$1,163.19

$1,177.52

$1,499.02

Answer 1

The value of Amanda's investment will be given by:
A=P(1+r)^n
where:
Principle, P=$1000
rate,r=3.5%
time,n=4+9/12=4 3/4=4.75 years
thus
A=1000(1+3.5/100)^4.75
A=$1177.52