Question

Pierce currently has $10,000. What was the value of his money five years ago if he has earned 5 percent interest each year?. . . A.. . $7,462.15. . . . . B.. $7,835.26. . . . . C.. $8,548.04.

Answer 1

B. 7,835.26

Step-by-step explanation:

Answer 2

Amount = $10000
Let us assume the principal = x
Amount of interest = 5%
Time = 5 years
Then
x (1 + i)^t = 10000
x(1 + 0.05)^5 = 10000
x(1.05)^5 = 10000
1.28x = 10000
x = 10000/1.276281
= 7835.26
From the above deduction, it can be easily concluded that the correct option among all the options that are given in the question is the second option or option "B".