Alice placed $1,900 in a savings account which earns 2.2% interest, compounded every year. How much will she have in the account

Question

1 year ago

7

after 5 years.

1 answer:

ella [17] · Answer 1 · 2024-05-07T15:18:16+03:00

She will have $2118 in her account after five years

<h3>How to determine the amount in five years?</h3>

The given parameters about the compound interest are

Principal Amount, P = $1,900

Interest Rate, R = 2.2%

Time, t = 5

Compound interests are different from simple interest, and they are calculated using the following compound interest formula

CI = P(1 + R)^t - P

To calculate the amount, we have:

A = P + CI

So, the equation becomes

A = P + P(1 + R)^t - P

Evaluate the like terms

A = P(1 + R)^t

Substitute the known values in the above equation

A = 1900 * (1 + 2.2%)^5

Express 2.2% as decimal

A = 1900 * (1 + 0.022)^5

Evaluate the sum

A = 1900 * (1.022)^5

Evaluate the exponent

A = 1900 * 1.11495

Evaluate the product

A = 2118

Hence, she will have $2118 in her account after five years

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