Question

A deposit of $1,500 is made into a savings account which earns 4 5 /8

% interest compounded annually. If no additional deposits or withdrawals are made, which amount is the total balance at the end of 5 years?

Answer 1

$1880.48 to the nearest cent.

Explanation:

Total after n years = P(1 + r)^n where P = initial deposit, r = the rate as a fraction.

4 5/8 % = 0.04625.

Here the total after 5 years = 1500(1 + 0.04625)^5

= $1880.48 to the nearest cent.