Question

A high school student has deposited $850 in a savings account that earns interest at a rate of 2.9% compounded monthly. What will the account balance be in seven years? Round the answer to the nearest hundredths place.

$864.48
$1,041.06
$6,317.60
$9,382.32

Answer 1

To calculate the account balance after 7 years, we can use the formula for compound interest. In this case, the account balance will be $1,023.48.

Step-by-step explanation:

To calculate the account balance after 7 years, we can use the formula for compound interest:

`A = P(1 + r/n)^(nt)`

Where:

• A is the final account balance
• P is the initial deposit
• r is the interest rate (expressed as a decimal)
• n is the number of times interest is compounded per year
• t is the number of years

In this case, the initial deposit (P) is $850, the interest rate (r) is 2.9% (or 0.029 as a decimal), interest is compounded monthly, and the number of years (t) is 7. So the formula becomes:

`A = 850(1 + 0.029/12)^(12*7)`

Let's calculate this:

`A = 850(1 + 0.0024)^(84)`

`A = 850(1.0024)^(84)`

A ≈ 850 * 1.20351122488

A ≈ $1,023.48

Rounding this to the nearest hundredths place, the account balance after 7 years will be $1,023.48.

Answer 2

$1,041.06

Step-by-step explanation:

Got it right.