Question

Jimmy invests $500 in an account with a 3% interest rate, making no other deposits or withdrawals. What will Jimmy’s account balance be after 10 years if the interest is compounded 2 times each year?

Answer 1

Answer:

Jimmy's account balance will be $673.43 after 10 years.

Step-by-step explanation:

The compound interest formula is given by:

$A = P(1 + \frac{r}{n})^{nt}$

Where A is the amount of money, P is the principal(the initial sum of money), r is the interest rate(as a decimal value), n is the number of times that interest is compounded per unit t and t is the time the money is invested or borrowed for.

In this problem, we have that:

$P = 500, r = 0.03, n = 2, t = 10$

What will Jimmy’s account balance be after 10 years if the interest is compounded 2 times each year?

$A = P(1 + \frac{r}{n})^{nt}$

$A = 500(1 + \frac{0.03}{2})^{2*10} = 673.43$

Jimmy's account balance will be $673.43 after 10 years.