Question

You $5,000 in a simple interest bearing account. If the annual interest rate is 3.5% , what will your account balance be in 10 years if you do not make any additional deposits

Answer 1

Answer:

Therefore my account balance will be in 10 year=$6,750

Step-by-step explanation:

Simple interest: Simple interest is calculated on the same principal each year.

$I=\frac{Prt}{100}$

I= simple interest.

r = rate of interest per annum.

t= time

Compound interest: The principal is not same each year. The principal will change from the second year.

The principal of 2nd year = Principal+ interest of 1st year.

The principal of 3rd year = Principal of 2nd year+ interest of 2nd year.

and so on

The Amount  $(A)=P(1+\frac{r}{100})^t$

Here P= $5,000

r=3.5%

and t=10 years

$I=\ \frac{5000\times 3.5\times 10}{100}$

 =$1750

Therefore my account balance will be in 10 year=$(5,000+1750)=$6,750.