Question

Barry's savings account has a balance of $2874. After 9 years, what will the amount of interest be at 5% compounded annually? a. $1589.52 c. $1575.52 b. $1584.52 d. $1437.00 Please select the best answer from the choices provide

Answer 1

b. $1584.52

Explanation:

To find the answer, first you have to find the amount that you will have after 9 years using the formula to calculate the future value:

F=P*(1+i)^n, where

F= future value

P= present value= $2874

i= interest rate= 5%

n= number of periods of time= 9

Now, you can replace the values in the formula:

F=2874*(1.05)^9

F= 4458.52

Then, as you know the value that you will have after 9 years, you can subtract the initial balance from this, to find the amount of interest:

$4,458.52-$2,874= $1,584.52

According to this, the answer is that the amount of interest at 5% compounded annually would be $1,584.52.