Question

how much money will be in a bank after three years if nine dollars is deposited adding interest rate of 5% compounded annually? Round to the nearest cent.

Answer 1

`10.45`

Step-by-step explanation

Given;

`\begin{gathered} p=9 \\ I=5 \\ t=3 \end{gathered}`

Recall, the compound interest formula;

`A=P\cdot \left(1+(r)/(n)\right)^(nt)`

Substituting the values into the formula;

`\begin{gathered} A=P\cdot \left(1+(r)/(n)\right)^(nt) \\ =9\left(1+(5\%\:)/(12)\right)^(12\cdot\:3) \\ =9\left(1+(0.05)/(12)\right)^(12\cdot\:3) \\ =9(1+0.00416)^(36) \\ =9*1.16147 \\ =10.45325 \\ \cong10.45 \end{gathered}`

Therefore, the amount in the bank account after 3 years will be $10.45