Question

Mario invested $6,000 in an account that pays 5% annual interest compounded annually. Using the formula A = P(1 + r)t, what is the approximate value of the account after 2.5 years?

Answer 1

$6778.36

General Formulas and Concepts:

Pre-Algebra

Order of Operations: BPEMDAS

1. Brackets
2. Parenthesis
3. Exponents
4. Multiplication
5. Division
6. Addition
7. Subtraction

• Left to Right

Algebra I

Compounded Interest Rate Formula:
`\displaystyle A = P(1 + (r)/(n))^(nt)`

• P is principle amount
• r is rate
• n is compounded rate
• t is time

Explanation:

Step 1: Define

Identify variables

P = 6000

r = 5% = 0.05

n = 1

t = 2.5

Step 2: Find Interest

1. Substitute in variables [Compounded Interest Rate Formula]:
   `\displaystyle A = 6000(1 + (0.05)/(1))^(1 \cdot 2.5)`
2. Simplify:
   `\displaystyle A = 6000(1.05)^(2.5)`
3. Evaluate:
   `\displaystyle A = 6778.36`