Question

How much would $200 invested at 7% interest compounded annually be worth after 5 years? Round your answer to the nearest cent.

Answer 1

A= P(1 + r) n (n to the power of) 

A= final balance 
P= initial quantity 
n= number of compounding periods 
r= percentage interest rate 

P= $200 
n= 9 years 
r= 5%= 0.05 

=$200 (1 + 0.05)9 (power of) 
=$310.26

Answer 2

Use the Compound Amount formula:

A = P (1 + r)^t, where P is the principal, r is the interest rate as a decimal fraction, and t is the number of years.

Here, A = $200 (1 + 0.07)^5    =    $500(1.07)^5    =   $280.51.

The interest earned would be $80.51.