Question

You invested $300 at 4% interest, compounded every year. What will your balance be after 5 years?

Answer 1

So the balance after 5 years will be 364.996 dollars.

Explanation:

The formula for compound interest is given by:

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

Where,

A=Amount

P=Principal

r= rate of interest

n=number of times interest is compounded per year

t=time(in years)

We are given

P=$300

r=4% or 0.04

t=5 years

n= 1 ( compounded every year)

Now we have to find A,

`A=300(1+(0.04)/(1))^ {1*5}`

`A=300(1.04)^(5)`

A=300*1.21665

A=364.996

So the balance after 5 years will be 364.996 dollars.