Question

3B What is the value of account after 10 years,

if interest is paid at 3.7%, if no other deposits
or withdrawals are made?
Initial deposit $6500, then compounded annually

Answer 1

Let's see

`\\ \rm\Rrightarrow A=P(1+r)^t`

• P=6500
• r=3.7%
• t=10years

So

A:-

`\\ \rm\Rrightarrow 6500(1+0.037)^(10)`

`\\ \rm\Rrightarrow 6500(1.037)^(10)`

`\\ \rm\Rrightarrow \$ 9347.6`

Answer 2

$9,347.62

Explanation:

Compound Interest Formula

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

where:

• A = final amount
• P = principal amount
• r = interest rate (in decimal form)
• n = number of times interest applied per time period
• t = number of time periods elapsed

Given:

• P = $6,500
• r = 3.7% = 0.037
• n = 1
• t = 10 years

Substituting the given values into the formula and solving for A:

`\implies \sf A=6500\left(1+(0.037)/(1)\right)^(10 * 1)`

`\implies \sf A=6500\left(1.037\right)^(10)`

`\implies \sf A=9347.617232`

Therefore, the value of account after 10 years is $9,347.62