Question

An initial amount of $800 is invested in a compound savings account with an annual interest rate of 4.5%. Using the formula A+P(1+r)^t what is the balance after five years?

$836.00
$873.62
$980.00
$996.95

Answer 1

800×(1+0.045)^(5)
=996.95
.......

Answer 2

The amount after 5 years becomes $996.95 .

Explanation:

Formula

`Amount = P(1+r)^(t)`

Where P is the principle , r is the rate of interest in the decimal form and t is the time in years .

As given

An initial amount of $800 is invested in a compound savings account with an annual interest rate of 4.5% for 5 years .

P = $800

4.5% is written in the decimal form

`= (4.5)/(100)`

= 0.045

t = 5 years

Put all the values in the formula

`Amount = 800(1+0.045)^(5)`

`Amount = 800(1.045)^(5)`

`Amount = 800* 1.24618`

Amount = $996.95 (Approx)

Therefore the amount after 5 years becomes $996.95 .