formula A=P(1+r)^t
An account earning interest at a rate of 4% has a principal of $500,000. If no more deposits or withdrawals are made, about how much money will be in the account after five years?
just plug in your values
A = 500000(1.04)^5
I get 608326.45
To find out how much money will be in the account after five years, we can use the formula for compound interest:
A = P(1+r)^t
Where:
A = the final amount
P = the principal (initial amount)
r = the interest rate in decimal form
t = the number of time periods
In this case, the principal (P) is $500,000, the interest rate (r) is 4% (which is equivalent to 0.04 in decimal form), and the number of time periods (t) is 5 years.
Substituting the values into the formula, we have:
A = 500,000(1+0.04)^5
Now we can calculate the final amount:
A = 500,000(1.04)^5
A = 500,000(1.2166529024)
A ≈ $608,326.45
Therefore, the approximate amount of money in the account after five years will be approximately $608,326.45.