Question

How much would kendra have in her account after three years if she started with $500 and earned 2 percent interest compounding annually? $530.89 $510.00 $500.00 $530.60?

Answer 1

$530.60

Step-by-step explanation:

Answer 2

The future value (FV) of an amount (P) deposited in an account with interest (r) coumpounded t times a year for n years is given by:


`FV=P\left(1+(r)/(t)\right)^(nt)`

Given that she started with $500 and earned 2 percent interest compounding annually this means that there is only one compounding in a year, i.e. t = 1.

Thus, the amount in his bank account after 3 years is given by:


`FV=500(1+0.02)^3 \\ \\ =500(1.02)^3=500(1.061) \\ \\ =\bold{\$530.60}`