Question

1. You invest $2500 with annual interest rate of 4%. How much money will you have after 5 years?Use the following formula:A = P(1 + r)Show your work here:Choose the correct answer$2952S29325314253042

Answer 1

$ 3042

Explanation

we need to use the formula:

$\begin{gathered} A=P(1+r)^t \\ \text{where} \\ \text{ P is the principal} \\ r\text{ is the rate ( in decimal)} \\ t\text{ is the time} \end{gathered}$

Step 1

a)let

$\begin{gathered} P=2500 \\ r=\text{ 4\% =}\frac{4}{100}=0.04 \\ r=0.04 \\ t=5\text{ ( years)} \end{gathered}$

b) now, replace

$\begin{gathered} A=P(1+r)^t \\ A=2500(1+0.04)^5 \\ A=2500(1.04)^5 \\ A=2500(1.2166) \\ A=3041.63 \\ \text{rounded} \\ A=3042 \end{gathered}$

therefore, the answer is

$ 3042