Question

Calculate annually compounded interest

Question
Evelyn placed $2.700 in a savings account which earns 1.1% interest, compounded every year. How much will
she have in the account after 5 years?

Answer 1

2852

Explanation:

A(t)=P(1+rn)

n⋅t=$2,700(1+0.0111)(5)(1)

≈$2,851.80

Answer 2

$2,851.80

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

First, change 1.1% into a decimal:

1.1% ->
`(1.1)/(100)` -> 0.011

Next, plug the values into the equation:

`A=2,700(1+(0.011)/(1))^(1(5))`

`A=2,851.80`

She will have $2,851.80 after 5 years.