If your investment of $5000 with the bank carries a compound interest of 8.75% per annum,the value of your investment at the end of three years is:
A) $1430.69
B) $6312.50
C) $6430.69
D) $5437.50

Question

Quizplus · Accepted Answer

Using the compound interest formula, we have:
A = P*(1+r/n)^(n*t)
where:
A = final amount
P = principal (initial investment)
r = annual interest rate (as a decimal)
n = number of times interest is compounded per year
t = number of years

Plugging in the given values, we get:
A = 5000*(1+0.0875/1)^(1*3)
A = $6430.69

Therefore, the best choice is C, which gives the correct value of the investment at the end of three years with the given compound interest rate.

If Your Investment of $5000 with the Bank Carries a Compound