Question

Hei has $1,300 in a retirement account earning 4% interest compounded annually. Each year after the first, she makes additional deposits of $1,300. After 5 years, what was her account balance if she did not make any withdrawals? Round each year's interest to the nearest cent if necessary.

The account had a balance of $
after 5 years.

Answer 1

Her account balance after 5 years is $8702.87

Explanation:

1500 (1.05) = 1575 --> after one year

1575 + 1500 = 3075

3075 (1.05) = 3228.75 --> after two years

3228.75 + 1500 = 4728.75

4728.75 (1.05) = 4965.1875 --> after three years

4965.1875 + 1500 = 6465.1875

6465.1875 (1.05) = 6788.44688 --> after four years

6788.44688 + 1500 = 8288.44688

8288.44688 (1.05) = 8702.86922 --> after five years = $8702.87