Question

A principal of $4800 is invested at 5.5% interest, compounded annually. How much will the investment be worth after 5 years?

Answer 1

A = $6273.41

Explanation:

`\displaystyle A = P \big{(}1+ (r)/(n) \big{)} ^(nt)`

• A = Amount of the investment in the future
• P = Principal value (initial amount)
• r = Interest rate
• n = Number of times interest is compounded per year
• t = Time (years)

Substitute all of the known values into this equation.

`\displaystyle A = 4800\big{(}1 + (.055)/(1)\big{)} ^{(1)(5)`

Solving for A in this equation gives us an answer of:

`A = 6273.41`

Therefore, the investment will be worth $6273.41 after 5 years.