Question

if you placed $5 into an account that paid interest at a rate of 5%, and compounded interest yearly, how much would that account be worth in 100 years

Answer 1

After adding interest the sum would be worth $657.51 .

Interest is the amount paid over and above the original amount to a lender or depositor by a borrower or deposit-taking financial institution at a predetermined rate in the domains of finance and economics (the amount borrowed).

• Interest differs from any fees the borrower may be required to pay to the lender or another party.
• interest also contrasts from a dividend, which is cash distributed to shareholders (owners) by a corporation from its profit or reserve, but not at a predefined rate or proportionally; rather, it is a portion of the reward or interest gained by risk-taking businessmen when revenue is made that surpasses all expenditures.

Interest when the principal is $5 , time is 100 years and rate is 5%.

We know that from compound interest:

Amount = principal (1 + rate)ⁿ

Therefore

Amount = 5 (1 +0.05)¹⁰⁰

Amount = $657.5062...

Amount ≈ $657.51

Therefore adding interest the sum would be worth $657.51