Question

Juan invested $100 in a savings account the earns 5% annually. The value, A, of the investment can be calculated using the equation A=p(1+r) with and exponent of t, where p is the investment in dollars, r is the interest rate, and t is the time of years. What amount will be in the savings account in two years?

Answer 1

$110.25

Explanation:

Step one:

given

principal= $100

rate= 5%

time = 2 years

Required

The final amount

Step two:

The compound interest formula is

`A=p(1+r)^t`

substituting we have

`A=100(1+0.05)^2\\\\A=100(1.05)^2\\\\A=100*1.1025\\\\A=110.25\\\\`

The final amount is $110.25