You invested $2,000 at 5 percent compounded annually.Determine the value of the investment in five years.(Round your answer to two decimals.)
A) $500.00
B) $552.56
C) $2,500.00
D) $2,552.56

Question

Quizplus · Accepted Answer

Using the compound interest formula: 
A = P(1 + r/n)^(nt)
where
A = final amount
P = initial principal = $2,000
r = annual interest rate = 5% = 0.05
n = number of times the interest is compounded per year = 1 (annually)
t = number of years = 5

A = 2000(1 + 0.05/1)^(1*5) = $2,552.56
So, the value of the investment in 5 years is $2,552.56. Therefore, the best choice is D.

You Invested $2,000 at 5 Percent Compounded Annually