Question

Marta deposits $15,000 in an account with 7% interest, compounded annually. How much will Marta's account balance be after 15 years?

Answer 1

$41,385.45

Explanation:

Compound interest is where you earn interest on money, and then you earn additional interest on your interest. Essentially, your interest is compounded so that you earn more money then if you had regular interest.There is a formula for calculating how much you earn with compound interest, it is `A=P(1+r)^n`, where
A= end amount of your investment
P=The starting amount
r= The percentage interest rate, but converted into decimals
n= The number of time periods

We can now substitute our available information into the formula, which is
P=$15,000
r=7%, or 0.07
n=15 years

Thus, the formula now looks like this: `A= 15000(1+0.07)^15`. Do the maths, and you will find that `A=41,385.4731107` or `A=$41,385.45`, since currency only goes to the hundredths, meaning we must round up or down the result. So the answer is that Martha will have $41, 385.45 after 15 years time.

I hope that helped!
https://www.moneysmart.gov.au/managing-your-money/saving/compound-interest