Question

Craig deposited $727 in a savings account earning 15% interest, compounded annually.To the nearest cent, how much will he have in 5 years?$

Answer 1

The compound interest formula is:

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

where A is the final amount, P is the principal, r is the interest rate (as a decimal), n is the number of times the interest is applied per year, and t is the number of years.

Given that the interest is compounded annually, then n = 1.

Substituting with P = $727, r = 0.15, n = 1, and t = 5 years, we get:

`\begin{gathered} A=727\cdot(1+0.15)^5 \\ A=1462.26\text{ \$} \end{gathered}`

In 5 years, he will have $1,462.26