PRC-2 · Chapter 5 · Question 4 of 50
An amount 'A' is invested for 5 years at an interest rate of 'B%' per annum compounded annually. Which standard formula correctly calculates the future value?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) A(1 + B/100)^5
Explanation
The standard compound interest formula is P(1 + r)^n. Here, P = A, the rate 'r' as a decimal is B/100, and n = 5. This yields A(1 + B/100)^5.
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