Question

Caelan has $7,500 in an account that earns 3.2% interest compounded annually. If she doesn't touch the money, how much will it be worth after 5 years?

Answer 1

It'll be worth approximately $8779.3 after 5 years.

Explanation:

Since it's compounded we need to use the appropriate formula to solve this problem, which is shown below:

M = C*(1 + r)^t

Where M is the final amount, r is the interest rate and t is the time elapsed in years. Applying the data from the problem we have:

M = 7500*(1 + 0.032)^5

M = 7500*(1.032)^5

M = 8779.2971

It'll be worth approximately $8779.3 after 5 years.