If Erika Lee invests $5,000 in a certificate of deposit that pays 5%, compounded annually, what amount will she have in 10 years?
A) $8,954
B) $8,144
C) $12,969
D) $7,401

Question

Quizplus · Accepted Answer

Using the formula for compound interest, we have: 
A = P(1 + r/n)^(nt)
where:
P = $5,000 (the principal)
r = 5% (the interest rate expressed in decimal form)
n = 1 (compounded annually)
t = 10 (number of years)

Plugging in the values, we get:
A = $5,000(1 + 0.05/1)^(1*10)
A = $5,000(1.05)^10
A = $8,143.87

Therefore, the closest amount to this answer is choice B, $8,144.

If Erika Lee Invests $5,000 in a Certificate of Deposit