Question

Jose now has $500. How much would he have after 6 years if he leaves it invested at 5.5% with annual compounding?a. $591.09b. $622.20c. $654.95d. $689.42e. $723.89

Answer 1

Answer:

D. 689. 42

Explanation:

The equation to calculate the total including the initial principal plus interest is $A=P(1+r/n)^{nt}$, where the following is true:

A= Total (principal plus interest)

P= Principal ($500)

R= Rate (5.5% in decimals = 0.055)

n= Compound (Annually -- 1 year)

t= Time in years (6 years)

$A=500(1+(0.055/1))^{1X6}$

$A=500(1+0.055)^{6}$

$A=500(1.055)^{6}$

$A=500(1.37884)$

$A=689.42$