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Pat invested x dollars in a fund that paid 8 percent annual

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Director
Director
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Joined: 08 Jun 2004
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Location: Europe
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Pat invested x dollars in a fund that paid 8 percent annual [#permalink] New post 09 May 2006, 00:15
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E

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Question Stats:

0% (00:00) correct 100% (01:20) wrong based on 3 sessions
Pat invested 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(0.08x)
B. 5(1.08x)
C. {1+5(0.08)}x
D. (1.08)^5 *(x)
E. (1.08x)^5
[Reveal] Spoiler: OA
Director
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Re: Pat invested x dollars in a fund that paid 8 percent annual [#permalink] New post 09 May 2006, 01:05
Let the amount invested is S. 8% annual interest compounded anualy means that in 1 year S will increase with 8% or 1,08*S. In the second year you will have 1,08*S+ 1,08*S*0,08=1,08*S*(1+0,08)=1.08^2*S, then in five years it would be in 5 th power respectively, or D)
Director
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Re: Pat invested x dollars in a fund that paid 8 percent annual [#permalink] New post 09 May 2006, 01:30
Use formula

A = P(1 + r)^n

P = principal
r = rate compounded annually
n = no of years

x(1 + .08)^5

Ans = D

**********

A more detailes formula when the interst is compounded more than 1 time a year :

A = P* [ (1+r/n) ^nt ]

n = no of times interest is compunded.
t = no of years.
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Re: Pat invested x dollars in a fund that paid 8 percent annual [#permalink] New post 12 Jul 2008, 08:44
D

thats the formula... A = P(1+r/100)^n

A = Final amount
P = inital amount
r = rate of interest in %
n = number of periods
Re: Pat invested x dollars in a fund that paid 8 percent annual   [#permalink] 12 Jul 2008, 08:44
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