A bank account yields 7 percent interest, compounded annually. If you deposit $1,000 in the account, what will the account balance be after 5 years?
1 Answer
Mar 29, 2016
Explanation:
Your total money, after depositing
The problem has given us the following:
#P# , the principal amount of the deposit (how much money you start with), is#$1,000# .#r# , the interest rate per year, is#7%# (which, as a decimal, is#0.07# ).#t# , the number of years, is#5# .
Using this info, we plug into the formula and solve:
Compare this to how much money you would make without compound interest:
You would make about