Question

Mike invests $33,000 with an interest rate of 5.5% compounded quarterly. After 5 years, what is the total amount of Mike's investment? Enter your answer in the box rounded to the nearest cent

Answer 1

We have to use the simple interest formula

`A=P(1+rt)`

Where P = 33,000; r = 0.055 (5.5%); t = 5. Replacing this values, we have

`\begin{gathered} A=33,000(1+0.055\cdot5)=33,000(1+0.275)=33,000(1.275) \\ A=42,075 \end{gathered}`

Hence, Mike's investment will be $42,075 after 5 years.