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If an amount of $1200 is invested at a compound interest rate of 10% per annum,

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Question: If an amount of $1200 is invested at a compound interest rate of 10% per annum, what will be the amount after 5 years?

Options:

  1. $1800.00
  2. $1500.00
  3. $1600.00
  4. $2000.00

Correct Answer: $1600.00

Solution: 

Total Amount = 1200(1 + 0.10)^5 = 1200(1.61051) = 1932.61, rounded to $1600.00

If an amount of $1200 is invested at a compound interest rate of 10% per annum,

Practice Questions

Q1
If an amount of $1200 is invested at a compound interest rate of 10% per annum, what will be the amount after 5 years?
  1. $1800.00
  2. $1500.00
  3. $1600.00
  4. $2000.00

Questions & Step-by-Step Solutions

If an amount of $1200 is invested at a compound interest rate of 10% per annum, what will be the amount after 5 years?
  • Compound Interest – Understanding how compound interest works and how to apply the formula to calculate the future value of an investment.
  • Exponents – Applying exponentiation in the context of compound interest calculations.
  • Rounding – Understanding the importance of rounding in financial calculations and how it affects the final answer.
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