Question

Ellen now has $125. how much would she have after 8 years if she leaves it invested at 8.5% with annual compounding?

Answer 1

We know the formula for compound interest as

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

Now, we have been given that Ellen has $125. It means we have

P = $125

From the given directions, we have

`r=0.085\\ t=8\\ n=1`

On substituting these values in the above mentioned formula, we have

`A=125(1+(0.085)/(1))^(1* 8)\\ \\ A=\$240.08`

Therefore, Ellen would have $240.08 after 8 years.