Question

A savings account earns 8% interest each year, compounded annually. If a person invests

$100 and makes no further deposits or withdrawals, what is the balance in the account
after 5 years? Round your answer to the nearest cent.

Answer 1

The balance in the account after 5 years will be approximately $147.01.

Step-by-step explanation:

To find the balance in the account after 5 years with 8% interest compounded annually, we can use the formula for compound interest:

A = P(1 + r/n)nt

Where:

• A = the ending balance
• P = the principal amount
• r = the interest rate (as a decimal)
• n = the number of times the interest is compounded per year
• t = the number of years

Substituting the values into the formula, we have:

A = $100(1 + 0.08/1)1*5

A = $100(1.08)5

Calculating this expression, the balance after 5 years is approximately $147.01.