Find the value after 5 years of a $3000. Savings account that pays three percent interest compounded yearly
To find the value after 5 years of a savings account that pays three percent interest compounded yearly, we can use the formula for compound interest:
A = P(1 + r/n)^(nt)
Where:
A = ending balance
P = principal amount ($3000 in this case)
r = annual interest rate (3% or 0.03)
n = number of times the interest is compounded per year (1 for yearly compounding)
t = number of years (5 in this case)
Plugging in the values into the formula, we have:
A = 3000(1 + 0.03/1)^(1*5)
A = 3000(1.03)^5
A = 3000(1.159274074)
A = $3477.82
Therefore, the value after 5 years of a $3000 savings account that pays three percent interest compounded yearly would be $3,477.82.