# 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