Question

Bradley snapp has deposited $7,000 in a guaranteed investment account with a promised rate of 6% compounded annually. he plans to leave it there for 4 full years when he will make a down payment on a car after graduation. how much of a down payment will he be able to make? select one:

a. $1,960.00
b. $2,175.57
c. $8,960.00
d. $8,837.34
e. $9,175.57

Answer 1

P = $7,000, principal
r = 6% = 0.06, rate
n = 1, compounding interval
t = 4 years

Calculate the value after 4 years.
A = 7000*(1 + 0.06)⁴
= $8,837.34

Answer: d. $8,837.34