A lump-sum deposit of $8,000 left in a bank for 12 years at 9%, compounded annually, will result in an ending balance of: (Select the closest answer.)

Question

Quizplus · Accepted Answer

The formula for compound interest is A = P(1 + r/n)^(nt), where A is the amount of money accumulated after n years, including interest, P is the principal amount (the initial amount of money), r is the annual interest rate (decimal), n is the number of times that interest is compounded per year, and t is the time the money is invested for in years. In this case, P = $8,000, r = 9% or 0.09, n = 1 (since it's compounded annually), and t = 12 years. Plugging these values into the formula gives A = 8000(1 + 0.09/1)^(1*12) = 8000(1.09)^12 ≈ $22,504.

A Lump-Sum Deposit of $8,000 Left in a Bank for 12