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Eli opened a savings account and deposited $700.00 as principal. The account earns 4% interest, compounded annually. What is the balance after 3 years?

Eli opened a savings account and deposited $700.00 as principal. The account earns-example-1
User Nyree
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The balance after 3 years is $787.5

Compound interest is a financial concept where interest is calculated not only on the initial principal amount but also on the accumulated interest from previous periods.

Amount of compound interest is expressed as

A = P ( 1+r)ⁿ

where n is the number of years it's compounded and A is the amount and p is the Principal.

A = 700( 1+ 0.04)³

A = 700( 1.04)³

A = 700 × 1.125

A = $787.5

Therefore, at the end of 3 years the balance will be $787.5

User Gabriel Stancu
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