Choose the answer.Suppose $800 is invested into an account that pays 3.5% interest, compounded annually. What is the balance in the account after 5 years?
Question 5 options:
$1142.86
$950.15
$560.00
$2800.00
To find the balance in the account after 5 years, we can use the formula for compound interest:
$A = P(1 + r/n)^(nt)
Where:
A = the balance after time t
P = the principal amount (initial investment)
r = the annual interest rate (as a decimal)
n = the number of times interest is compounded per year
t = the number of years
In this case, the principal amount is $800, the interest rate is 3.5% or 0.035 as a decimal, and interest is compounded annually (n = 1). Plugging in these values, we get:
$A = $800(1 + 0.035/1)^(1*5)
$A = $800(1.035)^5
$A = $800(1.192028123)
$A ≈ $956.82
Therefore, the balance in the account after 5 years is approximately $956.82.
None of the provided options match this result, so the correct answer is not listed.