Shawn has $2,500 invested at a guaranteed rate of 4.35%, compounded annually. What will his...

Question:

Shawn has $2,500 invested at a guaranteed rate of 4.35%, compounded annually. What will his investment be worth after five years?

$3,093.16 $2,857.59 $3,288.00 $2,997.04 $3,321.32

Compound Interest:

Compound interest (or compounding interest) is interest calculated on the initial principal, which also includes all of the accumulated interest of previous periods of a deposit or loan.

Answer and Explanation:

P= $2,500

r= 4.35%

r= 5 years

A=?

{eq}A= P\times {{(1+r)}^n} {/eq}

{eq}A= 2,500\times {{(1+0.0435)}^5} {/eq}= 2,500*1.2372= $3,093

Option A is correct answer i.e. $3,093.


Learn more about this topic:

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Compounding Interest Formulas: Calculations & Examples

from NY Regents Exam - Integrated Algebra: Help and Review

Chapter 16 / Lesson 8
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