Question

Judith has \$70 in a savings account that earns 5% interest , compounded annually .

Answer 1

Answer:

$81.03

Step-by-step explanation:

Given

$n = 1$ --- annually

$t =3$ --- time

$r = 5\%$ --- rate

$PV = \ 70$ ---- Present value

Required

The future value

This is calculated as:

$FV = PV * (1 + \frac{r}{n})^{nt}$

This gives:

$FV = 70 * (1 + \frac{5\%}{1})^{1*3}$

$FV = 70 * (1 + 5\%)^3$

$FV = 70 * (1.05)^3$

$FV = 70 * 1.157625$

$FV = 81.03375$

The future value to the nearest cent is: $81.03