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zepelin [54]
3 years ago
10

Fred deposited $1,000 into an account that earns 2 percent, compounded annually. How much money will he have in 5 years? A. $100

0 B. $1100 C. $1552 D. $1291 E. $1126
Business
1 answer:
mario62 [17]3 years ago
4 0

This situation can be modeled by an exponential equations.  Exponential equations typically take the form y=ab^{x}.  In an interest problem, a represents the initial deposit, b is the yearly interest rate, x is the number of years, and y is the total amount of money.


Start by filling out what you know:

a: 1000

b: 1.02 (Fred will have all of the money he had before (1) plus the interest rate (2%=2/100=0.02)

x: 5

y: ?


Now, all you have to do is solve.

y=1000(1.02)^{5}

y=1000(1.104)

y=1104

1104-->1100


The final answer is B. $1100.

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