If $1,000.00 is deposited into an account paying 3% interest compounded annually (at the end of each year), how much money is in the account after 5 years? (Round to the nearest cent.) I cannot remeber the formula for this problem can you help
Amount = principal( 1+i)^n
where i is the interest rate per period expressed as a decimal, and n is the number of interest periods
for yours i = .03
n = 5
Amount = 1000(1.03)^5
= ....
ahhh, just read your question again.
I think your are saying that $1000 is deposited EACH year for 5 years
Amount = deposit [1.03^5 - 1]/.03
= 5309.14
Absolutely! The formula you need for this problem is called the compound interest formula. It can be written as:
A = P(1 + r/n)^(nt)
Where:
A is the final amount of money in the account.
P is the principal amount (the initial deposit).
r is the annual interest rate (expressed as a decimal).
n is the number of times the interest is compounded per year.
t is the number of years.
In your case, the principal amount is $1,000, the annual interest rate is 3% (or 0.03 as a decimal), the interest is compounded annually (so n = 1), and the number of years is 5.
Now let's plug these values into the formula and calculate the final amount:
A = 1000(1 + 0.03/1)^(1*5)
First, simplify the expression inside the parentheses:
A = 1000(1.03)^5
Next, calculate the value inside the parentheses:
A = 1000(1.159274)
Finally, multiply the principal amount by the value inside the parentheses:
A ≈ $1,159.27
Therefore, after 5 years, the account will have approximately $1,159.27.