how do you calculate the final amount of an investment of $1000 growing at an annual rate of 3%, after 5…

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

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. $1000\times1.03^5$