Question

Ashley deposits $1000 into an account that earns 4% interest compounded 2 times per year. how much money will Ashley have in her account after 5 years? round to the nearest cent
A)1520.30
B)1892.19
C)1218.99
D)1253.00

Answer 1

The equation for compound interest is $A=P(1+\frac{r}{n})^{nt}$, where:
P is the original deposit (or "principal")
r is the rate of the interest (in decimal form)
n is the number of times per year that the interest is compounded
t is the time passed in years

Plugging in your values, we see that the equation becomes $A=1000(1+\frac{.04}{2})^{(2)(5)}=1000(1.02)^{10}$

which equals, to the nearest cent, $1218.99, which is answer C.