On January 1, 2016, Alex deposited $5,000 into a savings account that pays interest of 5 percent, compounded annually. If he makes no further deposits or withdrawals, how much will Alex have in his account on December 31, 2018 (3 years later)?
A) $5,750.
B) $5,788.
C) $5,813.
D) $5,825.

Question

Quizplus · Accepted Answer

Using the compound interest formula:

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

Where: 
A = final amount 
P = initial deposit 
r = interest rate 
n = number of times interest is compounded per year 
t = time in years

Plugging in the values:

A = 5,000(1 + 0.05/1)^(1*3) 
A = 5,788.44

Therefore, Alex will have $5,788.44 in his account on December 31, 2018. The closest answer choice is B.

On January 1, 2016, Alex Deposited $5,000 into a Savings