Rick invests $7,174 in an account that earns an annual interest rate of 3%. What will be the balance of the account in 18 years
1 answer:
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Answer:
You will have $623.3441462 in your account after 7 years
Step-by-step explanation:
The formula of the compounded interest is A = P , where
- A is the new value
- P is the initial value
- r is the rate in decimal
- n is the number of periods
- t is the time in years
∵ You are opening a savings account with $500
∴ P = 500
∵ The bank offers 3.2% interest, compounded yearly
∴ r = 3.2% ⇒ divide it by 100 to change it to decimal
∴ r = 3.2 ÷ 100 = 0.032
∵ The interest is compounded yearly
∴ n = 1
∵ The time is 7 years
∴ t = 7
→ Substitute these values in the rule above to find A
∵ A = 500
∴ A = 500
∴ A = 623.3441462
∴ You will have $623.3441462 in your account after 7 years