Question

Seema deposited $800 in a saving account earning 2.88% compounded annually. To the nearest cent, how much will she have in 16 years? Do not include the dollar sign in your answer.​

Answer 1

1260.04

Explanation:

The formula for compound interest is:

A = P(1+
`(r)/(n)`
`)^(nt)` where A is the final amount, P is the initial principal balance, r is the interest rate, n is the number of times interest applied per time period and t is the number of time periods elapsed. Since the deposit was compounded annually, just like the interest, we can omit the n in the equation.

Applying the formula to question:

800(1+
`(2.88)/(100)`
`)^(16)` = 1260.04 (rounded off to nearest cent since it's money)