Determine how much $1,000 deposited in a savings account paying 8% (compounded annually) will be worth after 5 years.
A) $5,526
B) $784
C) $1,400
D) $1,469

Question

Quizplus · Accepted Answer

Using the formula for compound interest:

A = P(1 + r/n)^(nt)
where 
A = the amount of money after time t
P = the principal amount (initial investment)
r = annual interest rate
n = number of times the interest is compounded per year
t = number of years

Plugging in the given values:

A = 1000(1 + 0.08/1)^(1*5)
A = $1,469.33

Therefore, the correct choice is D.

Determine How Much $1,000 Deposited in a Savings Account Paying