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You are about to retire. You suddenly realize you opened a saving account and deposited $1,000...

You are about to retire. You suddenly realize you opened a saving account and deposited $1,000 in it 45 years ago. You have not deposited or withdrawn from the account since the first deposit. What is the balance of the account now? The interest rate is 5%/year, compounded annually.

1. $8,525

2. $8,985

3. $9,134

4. $9,254

5. $9,851

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Answer #1

We use the formula:
A=P(1+r/100)^n
where
A=future value
P=present value
r=rate of interest
n=time period.

A=$1000*(1.05)^45

=$1000*8.985007793

=$8985(Approx).

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