Suppose your grandparents put $500 into an investment that earns 12% interest each year. How much, to the nearest cent, will be in the account after 10 years? (Remember, the formula is A = P (1 + r) t.)

A. $1552.92

B. $1296.87

C. $1569.21

D. $1947.99

Answer

After the 10 years with accrued interest, there will be roughly $1,552.92 in the account.

Explanation

Using the given equation A = P (1 + r) ^t

We are given that our initial start is $500.

P = 500

We are further told that the percentage interest gained is 12%, so we need to convert this into a decimal to be able to work with it.

12% / 100% = 0.12

r = 0.12

t is then our time in years

t = 10

A = 500 (1 + 0.12) ^10

A = 500 (1.12) ^10

A = 500 (3.1058)

A = 1,552.92

After the 10 years with accrued interest, there will be roughly $1,552.92 in the account.