Sarah invested $15,000 three years ago at 4%.Today the total amount would be closest to:

Question

Quizplus · Accepted Answer

The formula for calculating compound interest is:

A = P(1 + r/n)^(nt)

Where:

A = the final amount
P = the principal amount
r = the interest rate (as a decimal)
n = the number of times the interest is compounded per year
t = the number of years

In this case, we have:

P = $15,000
r = 0.04
n = 1 (interest is compounded annually)
t = 3

So:

A = $15,000(1 + 0.04/1)^(1*3)
A = $15,000(1.04)^3
A = $16,872

Therefore, the closest answer choice is C) $16,872.

Sarah Invested $15,000 Three Years Ago at 4