Question

How much would $200 invested at 7% interest compounded annually be

worth after 5 years? Round your answer to the nearest cent.

Answer 1

70dollars

Explanation:

simple interest

Answer 2

It will be worth $280.51.

Explanation:

The compound interest formula is given by:

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

Where A is the amount of money, P is the principal(the initial sum of money), r is the interest rate(as a decimal value), n is the number of times that interest is compounded per years and t is the time the money is invested or borrowed for, in years.

In this problem:

We want to find A, when
`P = 200, r = 0.07, n = 1, t = 5`

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

`A = 200*(1 + (0.7)/(1))^(1*5)`

`A = 280.51`

It will be worth $280.51.