At the beginning of year 1, Lisa wants to invest $500 at an annual compound interest rate of 3%. She makes no deposits to or withdrawals from the account.

Question

Which explicit formual can be used to find the accounts balance at the beginning of year 6? What is the balance?

A. A(n) = 500 x (1 + 0.03)^(n-1); $579.64

B. A(n) = 500 x (1 + 0.03)ⁿ; $597.03

C. A(n) = 500 + ( 0.03 x 500)^(n-1); $584.50

D. A(n) = 500 + (n - 1) ( 0.03 x 500); $575.00

Answer 1

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

Which looks like that?