At the beginning of year 1, Amada invests $800 at an annual compound interest rate of 5%. She makes no deposits to or withdrawals from the account.

Which explicit formula can be used to find the account's balance at the beginning of year 5? What is the balance?

A (n) = 800 • (1 + 0.05) (n - 1); $972.41

B. A (n) = 800 + (n - 1) (0.05 • 800); $960.00

C. A (n) = 800 • (1 + 0.05) n; $1021.03

D. A (n) = 800 + (0.005 • 800) (n - 1); $1056.00

Question

Mathematics

Talon Lloyd

21 December, 23:48

At the beginning of year 1, Amada invests $800 at an annual compound interest rate of 5%. She makes no deposits to or withdrawals from the account.

Which explicit formula can be used to find the account's balance at the beginning of year 5? What is the balance?

A (n) = 800 • (1 + 0.05) (n - 1); $972.41

B. A (n) = 800 + (n - 1) (0.05 • 800); $960.00

C. A (n) = 800 • (1 + 0.05) n; $1021.03

D. A (n) = 800 + (0.005 • 800) (n - 1); $1056.00

+4

Answers (2)

Know the Answer?

Nigel Curry · Answer 1

The answer is A. A (n) = 800 • (1 + 0.05) (n - 1); $972.41

Aylin Preston · Answer 2

Principal is the amount invested or borrowed from a bank or a financial institution. In this case the principal is $800. This is on a compound interest basis, hence we use the compound interest formula to get the amount accumulated. A = p (1 + r/100) ∧n where n is the interest period and r is the rate of interest.

A = 800 (1 + 5/100) ∧5

= $ 1021.03

Hence the correct answer is C