Question

Imagine you have invested $800 into a savings account that earns 3.5% interest compounded annually. What is the balance of your account after 5 years without more deposits or withdrawals?

Answer 1

The balance of your account after 5 years without more deposits or withdrawals will be $950.15.

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 unit t and t is the time the money is invested or borrowed for.

In this problem, we have that:

`P = 800, r = 0.035, t = 5, n = 1`

So

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

`A = 800(1 + (0.035)/(1))^(1*5)`

`A = 950.15`

The balance of your account after 5 years without more deposits or withdrawals will be $950.15.