Question

Find the compound interest and future value. Given: Principal = $855, Rate = 3% compounded annually, Time = 13 years.

Options:
a. Compound interest = $375.91, Future value = $1230.91
b. Compound interest = $345.51, Future value = $1200.51
c. Compound interest = $365.91, Future value = $1220.91
d. Compound interest = $385.91, Future value = $1250.91

Answer 1

To find the compound interest and future value, use the formula Compound Interest = Principal × (1 + interest rate)^time - Principal. Based on the given values, the correct compound interest and future value are: Compound interest = $385.91, Future value = $1250.91.

Step-by-step explanation:

To find the compound interest and future value, we can use the formula for compound interest:
Compound Interest = Principal × (1 + interest rate)time - Principal.

Step 1: Substitute the given values into the formula: Principal = $855, Rate = 3% = 0.03, Time = 13 years.

Step 2: Calculate the compound interest: Compound Interest = $855 × (1 + 0.03)13 - $855.

Step 3: Calculate the future value: Future Value = Principal + Compound Interest = $855 + Compound Interest.

Step 4: Simplify and calculate to find the compound interest and future value. Based on the options given, the correct answer is: Option d. Compound interest = $385.91, Future value = $1250.91.