Joe invests $2,550 at 3% interest compounded annually. What will be the balance in the account after 1.5 years?
To find the balance in the account after 1.5 years, we can use the formula for compound interest:
A = P(1 + r/n)^(nt)
where:
A = the future value of the investment/loan, including interest
P = the principal investment amount (the initial deposit or loan amount)
r = the annual interest rate (decimal)
n = the number of times that interest is compounded per unit t
t = the time the money is invested or borrowed for, in years
In this case, the principal investment is $2,550, the interest rate is 3% per annum, which is equal to 0.03 in decimal form. The interest is compounded annually, so the interest is compounded once a year (n = 1). And the account is invested for 1.5 years.
Plugging these values into the formula, we get:
A = $2,550(1 + 0.03/1)^(1*1.5)
A = $2,550(1 + 0.03)^(1.5)
A = $2,550(1.03)^(1.5)
A = $2,550 * (1.045289)
A = $2665.4877
So the balance in the account after 1.5 years will be approximately $2,665.49.