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If $600 are deposited into an account with 9.5% interest rate, compounded annually, what is the balance after 17 years?

User Wickoo
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1 Answer

3 votes

Answer:

Balance = $2806.67

Explanation:

The formula for compound interest is given by:

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

  • A(t) is the amount in the account after t years,
  • P is the principal (i.e., the deposit, which is $600 in this case),
  • r is the interest rate as a decimal (9.5% becomes 0.095),
  • n is the number of compounding periods per year (1 when money is compounded annually),
  • and t is the time in years.

Thus, we can plug in 600 for P, 0.095 for r, 1 for n and 17 for t to find A(17), the amount of money in the account after 17 years:

A(17) = 600(1 + 0.095/1)^(17 * 1)

A(17) = 600(1.095)^17

A(17) = 2806.669508

A(17) = 2806.67

Thus, the account will have about $2806.67 in 17 years.

User WillBroadbent
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