Question

You deposit $1500 into an Your friend deposits $1500 account that pays an interest into an account that pays a rate of 4% compounded simple annual interest rate of annually. What is the balance What is the balance after 5 years? after 5 years? 4% I= A=1824.97 I=300

Answer 1

The balance on the account after 5 years is $1,824.97 with an interest of $324.98

Here, we want to get the balance on the amount deposited after 5 years

To know this, we are going to use the compound interest formula

We have this as;

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

P is the amount deposited which is the principal of value $1,500

r is interest rate which is 4% which is same as 4/100 = 0.04

n is the number of times compounding is done per year which is 1 in this case

t is the number of years which is 5

Substituting these values;

`\begin{gathered} A\text{ = 1500(1 + }(0.04)/(1))^5 \\ \\ A=1500(1.04)^(^5) \\ \\ A\text{ = \$}1,824.98 \end{gathered}`

The interest is the difference between what was deposited and the amount

We have this as;

`1,824.98\text{ - 1500 = \$324.98}`