Question

If a principal of 4900 is invested at an interest rate of 6.25%, what is the total amount after one year, compounded annually?

A) $5193.75
B) $5023.75
C) $5218.75
D) $5318.75

Answer 1

The total amount after one year with compound interest is $5207.81. The given options in the question are incorrect.

Step-by-step explanation:

To calculate the total amount after one year with compound interest, we can use the formula:

Final Amount = Principal × (1 + interest rate)time

Given that the principal is $4900 and the interest rate is 6.25%, the formula becomes:

Final Amount = $4900 × (1 + 0.0625)1

Calculating this, we get:

Final Amount = $4900 × 1.0625 = $5207.81