Question

Natalie invests $5,632 in a retirement account with a fixed annual interest rate of 2% compounded 12 times per year. What will the account balance be after 16 years?

A) $8,398.46

C) $7,753.92

B) $8,610.85

D) $7,910.43

Answer 1

C) $7,753.92

Explanation:

Given data

Principal= $5,632

Rate=2%

n= 12

Time = 16 years

The expression for compound interest is

A=P(1+r/n)^nt

substitute

A= 5632(1+0.02/12)^12*16

A=5632(1+0.02/12)^12*16

A= 5632(1+0.00166)^12*16

A= 5632(1.00166)^12*16

A= 5632(1.00166)^192

A=5632*1.375

A=$7744

Hence the approximate amount is C) $7,753.92