Question

Dana puts 100.00 into an account for school expenses. The account earns 8% interest compounded annually how much will be in the account after 5 years?

Answer 1

Step 1: Write out the formula and the given values

`A=P(1+r)^t`
`\begin{gathered} \text{where} \\ A=\text{ amount after t years} \\ P=\text{ the principal} \\ r=\text{ the interest compounded annually} \\ t=\text{ the time in years} \end{gathered}`

In our case,

`\begin{gathered} P=100.00 \\ r=8\text{ \%} \\ t=5\text{years} \end{gathered}`

Step 2: Substitute the given values into the formula

`A=100(1+(8)/(100))^5=100*(1+0.08)^5=100*1.08^5\approx146.93`

Therefore the amount in the account after 5 years is 146.93