Question

Warren deposited his P12,000.00 in a local bank in 2019. 1. If the bank offers 5% interest rate compounded annually, how much will be in his bank account in 2028? Solution:​

Answer 1

Warren will have $17,400 in his bank account in 2028.

Explanation:

We need to find the principal, the rate, and the time.

So, the principal is $12,000, the money we started off with.

The rate is 5%.

Since the rate is compounded annually this means it occurs once a year. The time is in years. The deposit started in 2019, and we have to wait until 2028, so we need to subtract the two years.

2028 - 2019 = 9

We found the time. The time is 9 years.

So:

P = $12,000

R = 5%

T = 9 years

Now to find how much will be in his bank:

Simply multiply the principal by the rate.

12,000 × 0.05 = 600

And then multiply P×R by the time.

600 × 9 = 5,400

Now we add the principal + the amount that's added up.

12,000 + 5,400 = 17,400