Question

Suppose Heather places $3500 in an account that pays 11% interest compounded each year.Assume that no withdrawals are made from the account.

1) find the amount in the account at the end of 1 year.
2)find the amount in the account at the end of 2 years.

Answer 1

Answer: 1) $3885 2) $4312.35

Explanation:

The formula to find the compound amount is given by :-

`A=P(1+r)^t`, where P is the principal amount , r is the rate of interest and t is the time period.

Given : Principal amount :
`P=\$3500` ,

Rate of interest :
`r=0.11`

When t=1 , then the amount in the account at the end of 1 year:-

`A=3500(1+0.11)^1=\$3885`

When t=2 , then the amount in the account at the end of 1 year:-

`A=3500(1+0.11)^2=\$4312.35`