Question

Akira puts $1,000.00 into an account to use for school expenses. The account earns 5% interest, compounded annually. How much will be in the account after 7 years?

a) $1,348.85
b) $1,276.88
c) $1,202.50
d) $1,424.63

Answer 1

To calculate the amount in the account after 7 years with compound interest, use the formula A = P(1 + r/n)^(nt), with P = $1,000.00, r = 0.05, n = 1, and t = 7. The amount in the account after 7 years is $1,402.55.

Step-by-step explanation:

To calculate the amount in the account after 7 years, we can use the formula for compound interest: A = P(1 + r/n)^(nt), where A is the final amount, P is the principal amount, r is the interest rate, n is the number of times the interest is compounded per year, and t is the number of years. In this case, P = $1,000.00, r = 0.05 (5%), n = 1 (compounded annually), and t = 7 years. Plugging these values into the formula, we get:

A = $1,000.00(1 + 0.05/1)^(1*7)

A = $1,000.00(1 + 0.05)^7

A = $1,000.00(1.05)^7

A = $1,000.00(1.402551)

A = $1,402.55

Therefore, the amount in the account after 7 years will be $1,402.55.