Kaeli Company will invest $10,000 on January 1. If the fund earns 10% compound interest, what amount will be in the fund at the end of 5 years?
A)$10,000
B)$15,000
C)$16,000
D)$16,105

Question

Quizplus · Accepted Answer

Since the interest is compounded annually, we can use the formula: A = P(1 + r)^n, where A is the ending amount, P is the initial investment, r is the interest rate as a decimal, and n is the number of compounding periods. Plugging in the values, we get:
A = 10,000(1 + 0.10)^5
A = 16,105. Therefore, the amount in the fund at the end of 5 years will be $16,105.

Kaeli Company Will Invest $10,000 on January 1