Find the balance in the account after the given period. $4000 principal earning 6% compounded annually, after 5 years.
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1 point
$6,726.28
$5,352.90
$5,395.40
$7,716.74
To find the balance after 5 years with a principal of $4,000 earning 6% compounded annually, we can use the formula for compound interest:
A = P(1 + r/n)^(nt)
Where:
A = the future value of the investment/loan, including interest
P = the principal investment amount (the original deposit or loan amount)
r = the annual interest rate (decimal)
n = the number of times that interest is compounded per year
t = the time the money is invested/borrowed for, in years
In this case:
P = $4,000
r = 6% = 0.06
n = 1 (compounded annually)
t = 5 years
Plugging in the values:
A = $4,000(1 + 0.06/1)^(1*5)
A = $4,000(1 + 0.06)^5
A = $4,000(1.06)^5
A = $4,000 * 1.338225
A = $5,352.90
Therefore, the balance in the account after 5 years is $5,352.90. The correct answer is:
$5,352.90