Question

William invested $7000 in an account that earns 4.5% interest, compounded annually. The formula for compound interest is A(t) = P(1 + i)t. How much did William have in the account after 3 years? A. $21,340.38 B. $7988.16 C. $7094.93 D. $7945

Answer 1

7988.16

Explanation:

This is a matter of plugging in numbers.

P = 7000 (starting value)

l = 0.045 (rate)

t = 3 (number of years)

A(t) = 7000(1 + 0.045)^3

A(t) = 7000(1.045)^3

After three years, William will have 7988.16