Question

$1,000 is invested at a rate of 3.25%, compounded annually. Identify the compound interest function that models the situation. Then find the balance after 8 years.

Answer 1

The compound interest formula is given by:
A=P(1+r)^n
P=principle
r=rate
n=time

But:
P=$1000, r=3.25%, n=time
thus the function representing this will be:
A=1000(1+3.25/100)^n
A=1000(1.0325)^n
Thus the amount after 8 years will be:
A=1000(1.0325)^8
A=1,291.58
ANSWER: 1,291.58