Question

Brooke has $7 in an account that earns 10% interest compounded annually.

To the nearest cent, how much will she have in 2 years?

Answer 1

• I=P(1+r/100)^t
• I=7(1+0.1)²
• I=7(1.1)²
• I=7(1.21)
• I=$8.47

Answer 2

$8.47

Explanation:

Annual Compound Interest Formula

`\large \text{$ \sf A=P(1+r)^(t) $}`

where:

• A = final amount
• P = principal amount
• r = annual interest rate (in decimal form)
• t = time (in years)

Given:

• P = $7
• r = 10% = 0.1
• t = 2 years

Substituting the given values into the formula:

`\implies \sf 7(1+0.1)^2=8.47`