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Suppose that $80,000 is invested at 9% interest. Find the amount of money in the account after 2 years if the interest is compounded annually.

Suppose that $80,000 is invested at 9% interest. Find the amount of money in the account-example-1
User YavgenyP
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1 Answer

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25 votes

We are asked to determine the amount of money if a certain amount is compounded annually. We will use the following formula:


A=P(1+r)^t

Where:


\begin{gathered} A=\text{ future amount} \\ r=\text{ interest rate in decimal form} \\ t=\text{ time} \end{gathered}

The decimal form of the interest rate is the following:


r=(9)/(100)=0.09

Now we substitute the given values in the formula:


A=(80000)(1+0.09)^2

Now we solve the operations:


A=95048

Therefore, after two years the amount is $95048.

User Mike Ante
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