Question

Ashley deposits $1000 into an account that earns 4% interest compounded 2 times per year. how much money will Ashley have in her account after 5 years? round to the nearest cent

A)1520.30
B)1892.19
C)1218.99
D)1253.00

Answer 1

The equation for compound interest is
`A=P(1+(r)/(n))^(nt)`, where:
P is the original deposit (or "principal")
r is the rate of the interest (in decimal form)
n is the number of times per year that the interest is compounded
t is the time passed in years

Plugging in your values, we see that the equation becomes
`A=1000(1+(.04)/(2))^((2)(5))=1000(1.02)^(10)`

which equals, to the nearest cent, $1218.99, which is answer C.