If a depositor puts €100 in a bank account that earns 4 per cent interest compounded annually, how much will be in the account after five years?
A) €104.00
B) €120.00
C) €121.67
D) €123.98
E) €400.00

Question

Quizplus · Accepted Answer

To find the amount in the account after 5 years, we use the formula:
A = P(1 + r/n)^(nt)
where A is the amount after 5 years, P is the principal (initial deposit), r is the annual interest rate (as a decimal), n is the number of times the interest is compounded per year, and t is the number of years.
Plugging in the given values, we get:
A = 100(1 + 0.04/1)^(1*5)
A = 100(1.04)^5
A = 121.67
Therefore, the amount in the account after five years is €121.67, which is choice C.

If a Depositor Puts €100 in a Bank Account That