Lolaergasheva wrote:

If $1 were invested at 8 percent interest compounded annually, the total value of investment, in dollars at the end of 6 years would be

A. \((1.8)^6\)

B. \((1.08)^6\)

C. \(6(1.08)\)

D. \(1 + (0.08)^6\)

E. \(1 + 6(0.08)\)

You can use this formula to calculate compound interest:

Final balance = P( 1 + r/c)^nc where:

P = the principal (the initial investment)

r = the

annual interest rate

expressed as a decimalc = the number of times the interest is compounded each year

n = the number of years the investment collects interest

For this question, P = $1, r = 0.08, c = 1, n = 6

So, the FINAL BALANCE = 1( 1 + 0.08/1)^[(6)(1)]

= (1.08)^6

Answer:

Cheers,

Brent

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Brent Hanneson – Founder of gmatprepnow.com