Question

Tom opens a bank account and makes an initial deposit of $500. The banker tells Tom that he is going to receive an annual rate of 6% on his investment. Find the bank balance assuming Tom leaves the account untouched for 15 years.

Answer 1

Answer: $ 1198.28 (approx)

Explanation:

Here, the principal amount, P = $ 500

Annual rate of interest, r = 6%

Time, t = 15 years

Thus, the amount in the account, when the initial amount is compounded with the rate of 6% for 15 years,

`A=P(1+(r)/(100))^(15)`

`A=500(1+(6)/(100))^(15)`

`=500(1+0.06)^(15)`

`=500(1.06)^(15)`

`=500* 2.3965581931`

`=1198.27909655\approx 1198.28`

Hence, the balance after 15 years in the account = $ 1198.28 (approx)