Question

Maria invests $5,052 in a retirement account with a fixed annual interest rate of 8% compounded 6 times per year. What will the account balance be after 20 years?

A) $29,733.03
B) $26,807.53
C) $24,759.55
D) $32,351.56

Answer 1

To calculate the final account balance after 20 years with a fixed annual interest rate of 8% compounded 6 times per year, we can use the formula for compound interest. Plugging in the given values and simplifying the equation, the account balance will be approximately $29,733.03.

Step-by-step explanation:

To calculate the account balance after 20 years with a fixed annual interest rate of 8% compounded 6 times per year, we can use the formula for compound interest: A = P(1 + r/n)nt

Where:

• A is the final account balance
• P is the initial investment amount ($5,052)
• r is the annual interest rate (8% or 0.08)
• n is the number of times interest is compounded per year (6)
• t is the total number of years (20)

Plugging in the given values into the formula:

A = 5,052(1 + 0.08/6)6 * 20

Simplifying the equation: A ≈ $29,733.03

Therefore, the correct answer is A) $29,733.03.

Answer 2

To find the balance of Maria's investment after 20 years with compound interest, the compound interest formula is applied using the given annual interest rate of 8% compounded 6 times per year. The correct calculation will match one of the options provided.

Step-by-step explanation:

The question asks to determine the future value of an investment with compound interest. Specifically, Maria invests $5,052 at an 8% annual interest rate compounded 6 times per year, and we need to find the account balance after 20 years.

To calculate this, we use the compound interest formula:
A = P(1 + r/n)^(nt)
where A is the amount of money accumulated after n years, including interest, P is the principal amount, r is the annual interest rate (decimal), n is the number of times that interest is compounded per year, and t is the time the money is invested for in years.

Now let's plug in the values:
A = 5052(1 + 0.08/6)^(6*20)

Calculating the expression above, we find the final amount which should match one of the multiple-choice answers given.