Question

Zene deposited $50 in a savings account earning 5% interest, compounded annually. To thenearest cent, how much will he have in 3 years?

Answer 1

`\$57.88`

Explanation:

we know that

The compound interest formula is equal to

`A=P(1+(r)/(n))^(nt)`

where

A is the Final Investment Value

P is the Principal amount of money to be invested

r is the rate of interest in decimal

t is Number of Time Periods

n is the number of times interest is compounded per year

in this problem we have

`t=3\ years\\ P=\$50\\ r=5\%=5/100=0.05\\n=1`

substitute in the formula above

`A=50(1+(0.05)/(1))^(1*3)`

`A=50(1.05)^(3)`

`A=\$57.88`