Question

Suppose you put $1000 in an account earning 5.5% interest compounded continuously. How much will be in the account after four years?

a. $941
b. $1,246
c. $1,057
d. $1,839

Answer 1

Answer: The correct answer will be $1,220 in the account after four years.

Step-by-step explanation: For this problem we will use the "Simple Interest" equation to find the amount of interest you will earn after 4 years.

First, convert 5.5% to a decimal, 0.055.

I, interest = 1000 x 0.055 x 4

I = $220

Now add the interest to the total amount of money originally in the account.

1000 + 220 = $1,220