Use the compound interest formula to compute the total amount accumulated.
-$1810 for 4 years at 2% compounded annually
A) $1959.20
B) $1920.79
C) $1954.80
D) $1918.60

Question

Quizplus · Accepted Answer

The compound interest formula is A = P(1 + r/n)^(nt), where A is the amount of money accumulated after n years, including interest, P is the principal amount (the initial amount of money), r is the annual interest rate (decimal), n is the number of times that interest is compounded per year, and t is the time the money is invested for in years. For this problem, P = $1810, r = 2% = 0.02, n = 1 (since it's compounded annually), and t = 4 years. Plugging these values into the formula gives A = 1810(1 + 0.02/1)^(1*4) = 1810(1.02)^4 = $1959.20.

Use the Compound Interest Formula to Compute the Total Amount