Question

1) Beth invests $7,417 in a savings account

with a fixed annual interest rate of 4%
compounded 6 times per year. What will
the account balance be after 11 years?
A) $10,887.94 B) $11,967.35
C) $10,514.53 D) $11,499.63

Answer 1

D) $11,499.63

Explanation:

Lets use the compound interest formula provided to solve this:

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

P = initial balance

r = interest rate (decimal)

n = number of times compounded annually

t = time

First, change 4% into a decimal:

4% ->
`(4)/(100)` -> 0.04

Since the interest is compounded 6 times a year, we will use 6 for n. Lets plug in the values now:

`A=7,417(1+(0.04)/(6))^(6(11))`

`A=11,499.63`

Your answer is D) $11,499.63