Question

Albert invested the amount of $8,000 in a fixed deposit for 2 years at a compound interest rate of 5% per annum. How much will Albert get on the maturity of the fixed deposit?
A. $8510
B. $8620
C. $8730
D.$8820

Answer 1

Answer:

Option D.$8820

Step-by-step explanation:

we know that    

The compound interest formula is equal to  

$A=P(1+\frac{r}{n})^{nt}$  

where  

A is the Final Investment Value  

P is the Principal amount of money to be invested  

r is the rate of interest  in decimal

t is Number of Time Periods  

n is the number of times interest is compounded per year

in this problem we have  

$t=2\ years\\ P=\ 8,000\\ r=5\%=5/100=0.05\\n=1$  

substitute in the formula above  

$A=8,000(1+\frac{0.05}{1})^{1*2}$  

$A=8,000(1.05)^{2}$  

$A=\ 8,820$