Question

"Using the formula A = P (1 + r) Superscript t, what is the value of the account at the end of the fifth year? $3,071.92 $3,122.00 $3,851.77 $4,140.65"

Answer 1

Answer: $3122.00

Step-by-step explanation:

The value of the account at the end of the fifth year goes thus:

A = [P (1 + r) - 1/r] × (1 + r)

where,

P = principal = $500

R = rate = 7.5%

T = time =5 years

A = 500(1 + 7.5%)^5 - 1]/0.075 × 1.075

A = 3122.00

Solving the above equation, we can infer that the value of the account at the end of the fifth year will be $3122.00