Question

Laura goes to a bank and opens a new account.

• She deposits $5,500.
• The bank pays 1.6% interest compounded annually on this account.
• Laura makes no additional deposits or withdrawals.
Which amount is the closest to the account balance at the end of 4 years?
A) $5,852.00
B) $5.860.53
C)$5.940.00
D)$5.954.31

Answer 1

B) $5.860.53

Step-by-step explanation:

The computation of the future value is shown below:

= Principal amount × (1 + rate of interest)^number of years

= $5,500 × (1 + 0.016)^4

= $5,500 × 1.016^4

= $5.860.53

Hence, the second option is correct