Question

A youth group has a yard sale to raise money for a charity. The group earns $800 but decides to put its money in the

bank for a while. Calculate the amount of money the group will have given the following scenarios:
b. Hot Bank pays an interest rate of 3% compounded annually, and the youth group leaves the money in for 5
years.

Answer 1

The amount of money you will receive is $927.419

Explanation:

Consider the provided information.

A youth group has a yard sale to raise money for a charity. The group earns $800 but decides to put its money in the bank for a while.

We need to calculate the amount of money if hot bank pays an interest rate of 3% compounded annually, and the youth group leaves the money in for 5 years.

Future value can be calculated as:

`FV=PV(1+r)^n`

Substitute PV=800, r=0.03 and n=5 in above equation.

`800(1+0.03)^5`

`800(1.03)^5=927.419`

Hence, the amount of money you will receive is $927.419