Question

A principal of $4500 is invested at 5.75% Interest, compounded annually. How much will the investment be worth after 5 years?

Answer 1

$5,951.33

Explanation:

We can use the compound interest formula to solve this problem:

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

P = initial balance

r = interest rate (decimal)

n = number of times compounded annually

t = time

First, change 5.75% into a decimal:

5.75% ->
`(5.75)/(100)` -> 0.0575

Now, plug in the values:

`A=4,500(1+(0.0575)/(1))^(1(5))`

`A=5,951.33`

After 5 years, the investment will be worth $5,951.33