Question

Invest $25,000 in a account paying 6% compounded annually, what will the balance be after 5 years

Answer 1

The amount in the account after five years would be $33,500

Explanation:

Principal. P = $25,000

Rate of interest, r = 6%

Time, t = 5 years

Balance = ?

We know,

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

Since the interest is compounded annually, n = 1

Substituting the value we get,

$A = 25000(1+ \frac{6}{100} )^5\\\\A = 25000(\frac{106}{100})^5\\ \\A = 25000 X 1.34\\\\\\A = 33,500$

Therefore, the amount in the account after five years would be $33,500

Answer 2

Step-by-step explanation:

In the above question we have been given ,

P = $ 25,000    ( initial deposit )

r = 6%                 ( rate of interest )

n = 1

t = 5 years         ( time period )

Compound Interest Formula -

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

Now putting the appropriate values   -

$A = 25000(1+ \frac{6}{100} )^5= 25000(\frac{106}{100})^5\\ \\= 25000 X 1.34\\\\A = 33,500$

After 5  years the balance will be $33,500