Question

Suppose that $5000 is placed in an account that pays 2% interest compounded each year. Assume that no withdraws are made from the account. Follow instructions below do not do any roundingA- find the amount in the account at the end of one year B- find the amount in the account at the end of two years

Answer 1

Given;

`P=5000,r=2\text{ \%}=0.02`

(a) At the end of the first year;

`\begin{gathered} A=P(1+(r)/(n))^(nt) \\ \\ A=5000(1+0.02)^1 \\ \\ A=5100 \end{gathered}`

ANSWER: $5,100

(b) At the end of two years;

`\begin{gathered} A=5000(1+0.02)^2 \\ \\ A=5202 \end{gathered}`

ANSWER: $5,202