Question

A savings account balance is compounded annually. if the interest rate is 2% per year and the current balance is $1430.00 what will the balance be 8 years from now

Answer 1

The balance of the savings account 8 years from now, with an annual interest rate of 2% and an initial balance of $1430.00, will be approximately $1708.26.

Answer 2

A = P(1 + r/n)^(nt)

Where:

A = the future balance

P = the present balance ($1430.00)

r = the annual interest rate (2% or 0.02)

n = the number of times the interest is compounded per year (since it's compounded annually, n = 1)

t = the number of years (8 years in this case)

Plugging in the values into the formula:

A = 1430(1 + 0.02/1)^(1*8)

Simplifying the equation:

A = 1430(1.02)^8

Using a calculator or performing the calculations manually:

A ≈ 1430(1.171661)

A ≈ 1674.02

the balance after 8 years will be approximately $1674.02.