If you put $100 into a bank account that earns five percent interest per year,what is the formula you should use to determine the account's future value in one year?

Question

Quizplus · Accepted Answer

The formula for calculating future value is (1 + r)n, where r is the interest rate and n is the number of years. In this case, r is 0.05 (5% expressed as a decimal) and n is 1. So, the formula would be 1 + 0.05 = 1.05. You then multiply this by the present value (or principal) of $100, which gives you the future value of $105. Therefore, option C is correct. Options A and B are incorrect because they do not take into account compounding interest. Option D is incorrect because options A and B do not yield the same answer as option C.

If You Put $100 into a Bank Account That Earns