Question

You $5,000 in a simple interest bearing account. If the annual interest rate is 3.5% , what will your account balance be in 10 years if you do not make any additional deposits

Answer 1

Therefore my account balance will be in 10 year=$6,750

Explanation:

Simple interest: Simple interest is calculated on the same principal each year.

`I=(Prt)/(100)`

I= simple interest.

r = rate of interest per annum.

t= time

Compound interest: The principal is not same each year. The principal will change from the second year.

The principal of 2nd year = Principal+ interest of 1st year.

The principal of 3rd year = Principal of 2nd year+ interest of 2nd year.

and so on

The Amount
`(A)=P(1+(r)/(100))^t`

Here P= $5,000

r=3.5%

and t=10 years

`I=\$(5000* 3.5* 10)/(100)`

=$1750

Therefore my account balance will be in 10 year=$(5,000+1750)=$6,750.