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
Apr 27, 2018

#A=$3005#

Explanation:

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