Lance puts $2500 in a savings account that pays 3.75% interest compounded yearly. How much money to the nearest dollar will be in the account 5 years later if he makes no more deposits or withdrawals?

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Lance puts $2500 in a savings account that pays 3.75% interest compounded yearly. How much money to the nearest dollar will be in the account 5 years later if he makes no more deposits or withdrawals?

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Answer 1 · 2018-04-27T03:13:03

$A = $ 3005$ $A=$3005$

Explanation:

Since this is a yearly interest problem, it can be modeled by
$A = P {(1 + r)}^{t}$ $A=P(1+r)^t$ where $P$ $P$ is principal (starting amount), $r$ $r$ is rate in decimal form, $A$ $A$ is the final amount, and $t$ $t$ is time. Inputting knowns from the question:
$A = $ 2500 {(1 + 0.0375)}^{5}$ $A=$2500(1+0.0375)^5$ which simplifies to
$A=$3005.24...$ Since we are rounding to the nearest dollar,
$A=$3005$

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Lance puts $2500 in a savings account that pays 3.75% interest compounded yearly. How much money to the nearest dollar will be in the account 5 years later if he makes no more deposits or withdrawals?

1 Answer

Explanation:

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