Question

An account earned interest of 3% per year. The beginning balance was $150. The equation E = 150(1 + 0.03)^t represents the situation where E is the ending balance, and t is the time in years. If the account was open for 8 years, what was the ending balance? Round to the nearest cent and do not include cents in your answer.

A. $174.44
B. $175.50
C. $177.68
D. $178.99

Answer 1

To calculate the ending balance of an account with a 3% annual interest rate over 8 years, we use the compound interest formula to find that the balance is approximately $179.08, which rounds to the nearest option given, $178.99.

Step-by-step explanation:

The subject of the question is compound interest, which is a concept in mathematics. To find the ending balance after 8 years with an interest rate of 3%, we use the provided compound interest equation E = 150(1 + 0.03)^t. Plugging in the values, we get E = 150(1 + 0.03)^8.

To calculate this, follow the steps:

1. Calculate (1 + 0.03) to get 1.03.
2. Raise 1.03 to the power of 8 (1.03^8).
3. Multiply the result by 150 to get the ending balance.

Performing the calculations, the ending balance E is approximately $179.08. However, the question asks to round to the nearest cent and to choose the option that fits this value. Among the given options, option D, $178.99, is the closest to our calculated ending balance.