Problema Solution
Barry's savings account has a balance of $2874. After 9 years, what will the amount of interest be at 5% compounded annually?
Answer provided by our tutors
P = $2,874 the principal
r = 0.05 or 5% annual interest rate
t = 9 years
A = the future value (the amount in the account after 23 years)
A = P(1 + r)^t
A = 2874(1 + 0.05)^9
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A = $4,458.52
The interest is I = A - P:
I = $4,458.52 - $2,874
I = $1,584.52
The interest will be $1,584.52.