Question

You deposit $1,500 in a bank account that earns 7% annual interest. How much is in your account after 3 years?

Answer 1

A = $1,837.56

Explanation:

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

Where,

Future value, A = ?

Principal, p = $1,500

Interest rate, r = 7%

Time, t = 3 years

Number of periods, n = 1 (annually)

convert r as a percent to r as a decimal

r = 7/100

r = 0.07 rate per year

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

A = 1,500(1 + 0.07/1)^1*3

A = 1,500(1 + 0.07)^3

= 1,500(1.07)^3

= 1500(1.225043)

A = $1,837.5645

Approximately,

A = $1,837.56