Question

A local credit union guarantees that the money you invest will double every 5 years. If you invested $400, how much would be in your account after 30 years?

A) $400
B) $800
C) $1,200
D) $2,400

Answer 1

To calculate the amount of money in your account after 30 years, use the formula for compound interest. Assuming the annual interest rate is 100%, the correct answer is D) $2,400.

Step-by-step explanation:

To calculate the amount of money in your account after 30 years, we can use the formula for compound interest. The formula is: P(1 + r/n)^(nt), where P is the principal amount (initial investment), r is the annual interest rate, n is the number of times interest is compounded per year, and t is the number of years.

In this case, your initial investment is $400, the annual interest rate is not given, and the compound is presumably annual. Let's assume the annual interest rate is 100%, which guarantees the money will double every 5 years. So, r = 1.

Using the formula, we have: 400(1 + 1/1)^(1*30) = $409,600. Therefore, the correct answer is D) $2,400.