Pat invest x dollars in a fund that paid 8 percent annual interest, compounded annually. Which of the following represents the value, in dollars, of Pat's investment plus interest at the end of 5 years?
$$A.\ 5\left(0.08x\right)$$
$$B.\ 5\left(1.08x\right)$$
$$C.\ \left(1+5\left(0.08x\right)\right)x$$
$$D.\ 1.08^5\cdot x$$
$$E.\ \left(1.08x\right)^5$$
The OA is D.
Please, can any expert explain this PS question for me? I tried to solve it but I can't get the correct answer. I need your help. Thanks.
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Pat invested x dollars in a fund that paid 8 percent...
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DavidG@VeritasPrep
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The compound interest formula:swerve wrote:Pat invest x dollars in a fund that paid 8 percent annual interest, compounded annually. Which of the following represents the value, in dollars, of Pat's investment plus interest at the end of 5 years?
$$A.\ 5\left(0.08x\right)$$
$$B.\ 5\left(1.08x\right)$$
$$C.\ \left(1+5\left(0.08x\right)\right)x$$
$$D.\ 1.08^5\cdot x$$
$$E.\ \left(1.08x\right)^5$$
The OA is D.
Please, can any expert explain this PS question for me? I tried to solve it but I can't get the correct answer. I need your help. Thanks.
Total Value of Investment = P * (1 + r)^t
P: Principal
r: interest rate for period in question
t: number of times compounded
In this case:
P = x
r = .08
t = 5
Plug 'n chug: x * (1.08)^5. That's D
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Scott@TargetTestPrep
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We can use the compound interest formula A = P(1 + r/n)^(nt) to solve the problem.swerve wrote:Pat invest x dollars in a fund that paid 8 percent annual interest, compounded annually. Which of the following represents the value, in dollars, of Pat's investment plus interest at the end of 5 years?
$$A.\ 5\left(0.08x\right)$$
$$B.\ 5\left(1.08x\right)$$
$$C.\ \left(1+5\left(0.08x\right)\right)x$$
$$D.\ 1.08^5\cdot x$$
$$E.\ \left(1.08x\right)^5$$
Here, P = x, r = 0.08, n = 1, and t = 5. Therefore, the amount of her investment in 5 years will be:
A = x(1 + 0.08/1)^(1(5))
A = x(1.08)^5
Answer: D
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