Use the compound amount formula $A = P \left( 1 + \frac { r } { n } \right) ^ { n t }$ to find the accumulated amount on an investment of $\$ 500$, invested at an interest rate of $5 \%$ for 2 years, if the interest is compounded annually.
A)$1,050.00
B)$525.31
C)$18,000.00
D)$551.25

Question

Quizplus · Accepted Answer

The compound amount formula is $A = P \left( 1 + \frac { r } { n } \right) ^ { n t }$. Here, $P = \$500$, $r = 0.05$ (since $5\% = 0.05$), $n = 1$ (compounded annually), and $t = 2$ years. Plugging these values into the formula gives $A = 500 \left( 1 + \frac { 0.05 } { 1 } \right) ^ { 1 \cdot 2 } = 500 \left( 1.05 \right) ^2 = \$551.25$.

Use the Compound Amount Formula A=P(1+rn)ntA = P \left( 1 + \frac { r } { n } \right) ^ { n t }A=P(1+nr​)nt

Use the Compound Amount Formula $A = P \left( 1 + \frac { r } { n } \right) ^ { n t }$