A sum of P1,000 is invested now and left for eight years, at which time the principal is withdrawn. The interest has accrued is left for another eight years. If the effective annual interest rate is 5%, what will be the withdrawal amount at the end of the 16th year? A. P693.12 B. P700.12 C. P702.15 D. P705.42

The correct answer is D. P705.42.

The formula for compound interest is $A = P(1 + r/n)^nt$, where $A$

is the final amount, $P$ is the principal amount, $r$ is the interest rate, $n$ is the number of times interest is compounded per year, and $t$ is the number of years.

In this case, $P = 1000$, $r = 0.05$, $n = 1$, and $t = 16$. Substituting these values into the formula, we get $A = 1000(1 + 0.05/1)^{16} = 705.42$.

Option A is incorrect because it is the amount of money that would be left if the principal were not withdrawn after eight years. Option B is incorrect because it is the amount of interest that would be earned on the principal over eight years. Option C is incorrect because it is the amount of money that would be left if the interest were not compounded.