Question

Your savings account is currently worth $5,000. The account pays 2.5% interest compounded annually . How much will it be worth 3 years from now ?

A) 5,543.6

B) 5,384.5

C) 5,978.9

D) 5,998.2

Answer 1

	A/c balance after 3 years	PV×(1+r)^n
	Here,
1	Interest rate per annum	2.50%
2	Number of years	3
3	Number of compoundings per per annum	1
1÷3	Interest rate per period ( r)	2.50%
2×3	Number of periods (n)	3
	Present value (PV)	$                           5,000
	A/c balance after 3 years	$                       5,384.5
		5000*(1+2.50%)^3