how do you calculate the final amount of an i...
how do you calculate the final amount of an investment of $1000 growing at an annual rate of 3%, after 5 years?\n a. 1000·1.03^5\n b. 1000·(1 - 0.03)^5\n c. 1000·(1 + 0.03/5)^5\n d. 1000 + 1.03^5
Answer
# Explanation:
## Step1: Recall compound - interest formula
The compound - interest formula is $A = P(1 + r)^n$, where $P$ is the principal amount, $r$ is the annual interest rate (as a decimal), and $n$ is the number of years.
## Step2: Identify values
Here, $P=\$1000$, $r = 0.03$ (since $3\%=0.03$), and $n = 5$.
## Step3: Substitute values into formula
Substituting the values into the formula, we get $A=1000\times(1 + 0.03)^5=1000\times1.03^5$.
# Answer:
A. $1000\times1.03^5$