Question

$55,000 at 16% compounded annually for 2 years.

Answer 1

Explanation:

The question wants us to find the amount that will be obtained when $55,000 at 16% is compounded annually for 2 years

To do so, we will use the formula below

$\begin{gathered} A=P(1+\frac{r}{100})^t \\ \text{where} \\ r=16\text{ \%=0.16} \\ t=2 \\ P=55,000 \end{gathered}$

Thus, we will have

$\begin{gathered} A=55000(1+0.16)^2 \\ A=55000(1.16)^2 \\ A=55000\times1.3456 \\ A=74008 \end{gathered}$

Thus, the amount will be $74,008