Question

Barry's savings account has a balance of $2874. After 9 years, what will the amount of interest be at 5% compounded annually? a. $1589.52 c. $1575.52 b. $1584.52 d. $1437.00

Answer 1

Answer:

Option B. $\ 1,584.52$

Step-by-step explanation:

we know that    

The compound interest formula is equal to  

$A=P(1+\frac{r}{n})^{nt}$  

where  

A is the Final Investment Value  

P is the Principal amount of money to be invested  

r is the rate of interest  in decimal

t is Number of Time Periods  

n is the number of times interest is compounded per year

in this problem we have  

$t=9\ years\\ P=\ 2,874\\ r=0.05\\n=1$  

substitute in the formula above  

$A=\ 2,874(1+\frac{0.05}{1})^{1*9}=\ 4,458.52$  

Find the interest

$I=A-P=\ 4,458.52-\ 2,874=\ 1,584.52$