Mathematics

Question

An initial amount of $800 is invested in a compound savings account with an annual interest rate of 4.5%. Using the formula A+P(1+r)^t what is the balance after five years?
$836.00
$873.62
$980.00
$996.95

2 Answer

  • 800×(1+0.045)^(5)
    =996.95
    .......
  • Answer:

    The amount after 5 years becomes $996.95 .

    Step-by-step explanation:

    Formula

    [tex]Amount = P(1+r)^{t}[/tex]

    Where P is the principle , r is the rate of interest in the decimal form and t is the time in years .

    As given

    An initial amount of $800 is invested in a compound savings account with an annual interest rate of 4.5% for 5 years .

    P = $800

    4.5%  is written in the decimal form

    [tex]= \frac{4.5}{100}[/tex]

    = 0.045

    t = 5 years

    Put all the values in the formula

    [tex]Amount = 800(1+0.045)^{5}[/tex]

    [tex]Amount = 800(1.045)^{5}[/tex]

    [tex]Amount = 800\times 1.24618[/tex]

    Amount = $996.95 (Approx)

    Therefore the amount after 5 years becomes $996.95 .

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