Question

Jamal's savings account Initial deposit: $ 7000 Annual interest rate: 5.5% interest compounded annually How much How much will will Jamal's account be worth in 1 year?

Answer 1

Jamal's account will be worth $7,385.00 after one year, with the initial $7,000 deposit growing due to 5.5% annual interest compounded annually.

Step-by-step explanation:

The question asks how much Jamal's savings account, with an initial deposit of $7,000 and an annual interest rate of 5.5% compounded annually, will be worth in one year.

Step-by-step solution:

1. Identify the principal amount (P), which is the initial deposit. In this case, P = $7,000.
2. Identify the annual interest rate (r). Here, r = 5.5%, which can be written as 0.055 in decimal form.
3. Since interest is compounded annually and we are looking at one year, the number of times interest is compounded per year (n) is 1.
4. Use the formula for compound interest: A = P(1 + r/n)^(nt), where A is the amount of money accumulated after n years, including interest. Since t (the time in years) is 1, the formula simplifies to A = P(1 + r).
5. Calculate the amount after one year: A = $7,000(1 + 0.055) = $7,000(1.055) = $7,385.00.

Therefore, after one year, Jamal's savings account will be worth $7,385.00.