Question

Imagine you have invested $800 into a savings account that earns 3.5% interest compounded annually. What is the balance of your account after 5 years without more deposits or withdrawals?

Answer 1

Answer:

The balance of your account after 5 years without more deposits or withdrawals will be $950.15.

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:

$P = 800, r = 0.035, t = 5, n = 1$

So

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

$A = 800(1 + \frac{0.035}{1})^{1*5}$

$A = 950.15$

The balance of your account after 5 years without more deposits or withdrawals will be $950.15.