Question

Correct answer only please!

Elizabeth deposited $4,530 in a savings account earning 11% interest, compounded annually.

To the nearest cent, how much will she have in 5 years?

Use the formula B = p(1 + r)t, where B is the balance (final amount), p is the principal (starting amount), r is the interest rate expressed as a decimal, and t is the time in years.

Answer 1

Answer: Elizabeth earned $7270.91.

Explanation:

The formula given to us is the formula for compounded interest.

You can substitute the values given in the first part of the problem into the equation to find B, the final amount:

`B = p*(1+r)^t\\\\B = 4530 * (1 + 0.11)^5`

Note that 11% interest is expressed as 0.11 because it is a percentage of a whole number.

Now, use a calculator to raise 1.11 to the fifth degree to get this:

`B = 4530 * 1.605058\\B = 7270.912`

As such, Elizabeth earned $7270.91 in interest after 5 years.