Compound interest
Generally
A=P(1+r/n)^nt
Where
P = principal amount
r = annual rate of interest
t = number of years
A = amount of money after year t
n = number of times the interest is compounding per year.
In this case the, the n=12, since the APR is compounding monthly.
Also R=4%=4/100=0.04
t=5years
Adella wants her money to amount to $10,000 in 5 years
Then, A=$10,000
Applying the formulas
A=P(1+r/n)^nt
$10,000=P(1+0.04/12)^(12×5)
$10,000=P(1+0.003333)^60
$10,000=P(1.003333)^60
$10,000=P(1.221)
Then P=$10,000/1.221
P=$8190.008
The correct answer is the third option
It is closer to the third option than it is to the second option
