If $5,600 is deposited into an account paying 5% interest compounded annually, how much money is in the account agter 3 years?
5600*(1.05)^3 = ?
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Is the answer $6482.70?
Yes
To find the amount of money in the account after 3 years, we need to use the formula for compound interest:
A = P(1 + r/n)^(nt)
Where:
A = the future value of the investment/amount in the account
P = the principal amount (initial deposit)
r = annual interest rate (in decimal form)
n = number of times the interest is compounded per year
t = number of years
In this case:
P = $5,600
r = 5% or 0.05 (converted to decimal form)
n = 1 (compounded annually, so only once per year)
t = 3 years
Now we can plug in the values into the formula and calculate the amount:
A = 5,600(1 + 0.05/1)^(1*3)
A = 5,600(1.05)^3
A ≈ 5,600(1.157625)
A ≈ $6,476.75
Therefore, the amount of money in the account after 3 years would be approximately $6,476.75.