Question

Alberto invests $4,571 in a retirement account with a fixed annual interest rate of 3% compounded 6 times per year. What will the account balance be after 18 years?

A) $7,833.32

B) $7,162.06

C) $7,602.38

D) $6,985.59

Answer 1

A) $7,833.32

Explanation:

Given data

Principal= $4,571

Rate=3%

n= 6

Time = 18 years

The expression for compound interest is

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

substitute

A= 4571(1+0.03/6)^6*18

A= 4571(1+0.03/6)^6*18

A= 4571(1+0.005)^6*18

A= 4571(1.005)^6*18

A= 4571(1.005)^108

A=4571*1.7136

A=$7832.86

Hence the approximate amount is A) $7,833.32