If John invested $ 1 at 5 percent interest compounded

Be super careful whenever you have a percent less than 10 — there will always be a zero after the decimal. (e.g. 5% = 0.05, 2.2% = 0.022, etc.)

One way you can think about converting a percent into a decimal is dividing by 100. So 50% = 50/100 = 0.5, while 5% = 5/100 = 0.05.

It can also help to think logically about the size of the numbers. 5% is a pretty small percent, so we want a decimal that is also pretty small. 0.5 is half of 1 (pretty large), so it isn't a logical match — we want a much smaller decimal.

VJesus12 wrote:If John invested $ 1 at 5 percent interest compounded annually, the total value of the investment, in dollars, at the end of 4 years would be

A. (1.5)^4
B. 4(1.5)
C. (1.05)^4
D. 1 + (0.05)^4
E. 1 + 4(0.05)

Using the compound interest formula we have:

1(1 + 0.05)^4

(1.05)^4

Answer: C