Stella deposits $5,000 in a savings account at a bank that offers interest of 5.5% on such accounts.What is the value of the money in her savings account in one year's time?
A)$4739
B)$5135
C)$5275
D)$7750

Question

Quizplus · Accepted Answer

To calculate the value of the savings account after one year, we need to use the formula:

FV = PV x (1 + r)n

where:
FV = future value (or value after one year)
PV = present value (or initial deposit)
r = interest rate expressed as a decimal
n = number of compounding periods (in this case, one year)

Substituting the given values, we get:

FV = 5000 x (1 + 0.055)^1
FV = 5000 x 1.055
FV = 5275

Therefore, the value of the money in Stella's savings account after one year is $5275.

Option C is the correct answer.

Stella Deposits $5,000 in a Savings Account at a Bank