Final answer:
Depositing $500 in an account with a 7% annual interest rate compounded annually will result in a balance of $983.58 after 10 years, which is calculated using the compound interest formula.
Step-by-step explanation:
annual 7% interest rate compounded annually:
After depositing $500 in an account with an annual 7% interest rate compounded annually, you will have $983.58 at the end of 10 years. To calculate this, you can use the formula for compound interest, which is A = P(1 + r/n)^(nt) where:
A is the amount of money accumulated after n years, including interest P is the principal amount (the initial amount of money) r is the annual interest rate (decimal). n is the number of times that interest is compounded per year. t is the time the money is invested for, in years. In this case, P = $500, r = 7% or 0.07, and since it is compounded annually, n = 1, and t = 10 years. Put these values into the formula to get A = $500(1 + 0.07/1)^(1*10), which simplifies to A = $500(1.07)^10. Calculate this and you get $983.58. Use the formula: A = P(1 + r/n)^(nt) Since the interest is compounded annually, n = 1 So the formula becomes: