Question

Suppose your friend's parents invest $20000 in an account paying 7% compounded annually. What will the balance be in 7 years

Answer 1

The formula for compound interest is:


`I = P(1 + (r)/(n) ) ^(nt)`

Where P is the amount you start with, r is the rate, t is the time, and n is the number of times the interest is calculated per year. So for you, this would look like:


`I = 20000(1 + (0.05)/(1)) ^(1*7)`

Hope it helps!

Answer 2

The balance will be: $500,637.91