$200 invested in a savings account paying an annual interest rate of 5 percent will be worth how much at the end of ﬁve years, assuming all interest earned remains in the account?

Question

Quizplus · Accepted Answer

Using the formula for compound interest: 
A = P(1 + r/n)^(n*t)
where A = amount, P = principal, r = annual interest rate, n = number of times interest is compounded per year, and t = time in years.

Substituting the given values,
A = 200(1 + 0.05/1)^(1*5)
A = 200(1.05)^5
A = $255.26 (rounded to the nearest cent)

Therefore, the best choice is D.

$200 Invested in a Savings Account Paying an Annual Interest