Question

$A=p(1+r{)}^t$ , where
$A$ is the total amount after $t$ years
$P$ is the principal, $t$ is the time in years , $r$ is the rate of interest compounded annually. Sheetal saves $5,000inasavingaccountwhichgives$2$ % interest compounded annually. Calculate interest sheetal will get after four years.Express your answer to the nearest whole number.

• A. 412
• B. 512
• C. 521
• D. 421

Answer 1

Answer: (A)

412

Formula for calculating future value is:
future value $=$ present value $(1+r{)}^n$
Given: Present value $=5000$
$r=2$
$n=4$
$I=?$
$FV=5000{(1+\frac{2}{100})}^4$
$FV=5412.16$
Interest $=$ future value $-$ present value
Interest $=5412.16-5000$
$I\approx 412$