If $690 is invested in an account that earns 20.75%, compounded annually, what will the account balance be after 25 years? (Round your answer to the nearest cent.)
690 (1.2075)^25 = $ 79,917.93
To get the account balance after 25 years, we can use the compound interest formula:
A = P(1 + r/n)^(nt)
Where:
A is the final account balance
P is the principal amount (initial investment)
r is the annual interest rate (as a decimal)
n is the number of times the interest is compounded per year
t is the number of years of the investment
In this case:
P = $690
r = 20.75% = 0.2075 (converted to decimal)
n = 1 (compounded annually)
t = 25
Substituting these values into the formula:
A = 690(1 + 0.2075/1)^(1*25)
Simplifying:
A = 690(1.2075)^25
Calculating (1.2075)^25:
A ≈ 690 * 5.4296
A ≈ $3,737.62
So, the account balance after 25 years will be approximately $3,737.62.