Suppose your friend's parents invest $ 25 comma 000 in an account paying 6 % compounded annually. What will the balance be after 7 years?
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Part 1
The account balance will be $
enter your response here
(Round to the nearest cent as needed.)
To calculate the balance after 7 years, we can use the formula for compound interest:
A = P(1 + r/n)^(nt)
Where:
A = the final account balance
P = the principal amount (initial investment)
r = annual interest rate (in decimal form)
n = number of times interest is compounded per year
t = number of years
In this case, P = $25,000, r = 0.06, n = 1 (compounded annually), and t = 7.
Plugging these values into the formula, we get:
A = $25,000(1 + 0.06/1)^(1*7)
Simplifying further:
A = $25,000(1 + 0.06)^7
A = $25,000(1.06)^7
A ≈ $25,000(1.404928)
Calculating the value:
A ≈ $35,123.20
So, the balance after 7 years will be approximately $35,123.20.
your inncorect
I apologize for the mistake. Let's recalculate using the correct formula:
A = P(1 + r/n)^(nt)
Where:
A = the final account balance
P = the principal amount (initial investment)
r = annual interest rate (in decimal form)
n = number of times interest is compounded per year
t = number of years
In this case, P = $25,000, r = 0.06, n = 1 (compounded annually), and t = 7.
Plugging these values into the formula, we get:
A = $25,000(1 + 0.06/1)^(1*7)
Simplifying further:
A = $25,000(1 + 0.06)^7
A = $25,000(1.06)^7
A ≈ $25,000(1.4401)
Calculating the value:
A ≈ $36,002.50
So, the balance after 7 years will be approximately $36,002.50.