Final answer:
To find out how much money will be in the account after three years, you can use the formula for compound interest. In this case, the account with a principal of $150,000 and an interest rate of 7% compounded annually will have about $182,704.98 after three years.
Step-by-step explanation:
To find out how much money will be in the account after three years, we can use the formula for compound interest:
A = P(1 + r/n)^(nt)
Where:
- A is the final amount in the account
- P is the principal amount (initial deposit)
- r is the interest rate (in decimal form)
- n is the number of times interest is compounded per year
- t is the number of years
In this case, the principal amount is $150,000, the interest rate is 7% (or 0.07), and the account is compounded annually (n = 1).
Plugging these values into the formula, we get:
A = 150,000(1 + 0.07/1)^(1*3)
Calculating this, we find that about $182,704.98 will be in the account after three years.