Question

Ellen now has $125. how much would she have after 8 years if she leaves it invested at 8.5% with annual compounding?

Answer 1

We know the formula for compound interest as

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

Now, we have been given that Ellen has $125. It means we have

P = $125

From the given directions, we have

$r=0.085\\ t=8\\ n=1$

On substituting these values in the above mentioned formula, we have

$A=125(1+\frac{0.085}{1})^{1\times 8}\\ \\ A=\ 240.08$

Therefore, Ellen would have $240.08 after 8 years.