An investment account earns 3.5% per year compounded annually. If the initial investment was
$5,000.00, how much is in the account after 3 years? Round your answer to the nearest dollar. (2
points
To calculate the balance in the account after 3 years, we use the formula for compound interest:
A = P(1 + r)^t
Where:
A = the future value of the investment
P = the principal investment amount (initial investment)
r = the annual interest rate (3.5% or 0.035 as a decimal)
t = the number of years the investment is held (3 years)
Substitute the given values into the formula:
A = $5,000(1 + 0.035)^3
A = $5,000(1.035)^3
A = $5,000(1.113002875)
A = $5,565.01
Therefore, after 3 years, the balance in the account is approximately $5,565.