Question

1. You deposit $250 in a new savings account paying 3% interest compounded annually.

If the account is left alone, how much money will be in the account at the end of 5
years? *

Answer 1

$289.82

Explanation:

Lets use the compound interest formula to solve:

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

P = initial balance

r = interest rate (decimal)

n = number of times compounded annually

t = time

Our first step is to change 3% into a decimal:

3% ->
`(3)/(100)` -> 0.03

Now, lets plug the values into the equation:

`A=250(1+(0.03)/(1))^(1(5))`

`A=289.82`

The account balance after 5 years will be $289.82