Question

A savings account with a current balance of $5,000 earns 2.75% annual interest, compounded continuously. To the nearest dollar, what will be the account balance in 10 years?

Answer 1

This is an example of growth because every year, the account earns 2.75% interest.

To solve this problem I will use the general formula for compound interest.

A = 5,000(1 + 0.0275/1)^10

A = 5,000(1.312)

A = $6558

After ten years, the savings account would have a balance of $6558 due to the 2.75% annual interest.

Explanation:

Answer 2

Use this formula. P=5000, r=0.0275, n=e, t=10