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Kenneth opened a savings account and deposited $300.00 as principal. The account earns
14% interest, compounded annually. What is the balance after 8 years?

Use the formula A = P1+
P(1 + r/n)", where A is the balance (final amount), P is the principal
(starting amount), r is the interest rate expressed as a decimal, n is the number of times per
year that the interest is compounded, and t is the time in years.
Round your answer to the nearest cent.

Respuesta :

Wallameg000

Answer:

$855.78

Step-by-step explanation:

Interest, in this context, is the amount of money a saving account can earn over time.

Compound Interest Formula

There are 2 types of interest: simple and compound. For this question, we are going to use the compound interest formula. This formula is [tex]A = P(1+\frac{r}{n})^{nt}[/tex]. As stated in the question, A is the total balance, P is the principal, r is the interest rate, n is how often the interest is compounded, and t is time.

Variables

The values of these variables for this question are as follows:

  • P = 300.00

The principal is the initial amount, and the question states that the account starts at 300 dollars.

  • r = 0.14

The question says the interest rate is 14%, so we can convert this to the decimal 0.14.

  • n = 1

If something is compounded annually, it is compounded once a year, so n must be 1.

  • t = 8

If we want to find the balance after 8 years, we should set t equal to 8.

Solving for A

To find A, all we have to do is plug the variables into the formula.

  • [tex]A = 300(1+\frac{0.14}{1})^{1*8}[/tex]

This can be rewritten as:

  • [tex]A=300(1.14)^8[/tex]

Solve this to find that A ≈ 855.78. After 8 years, the balance will be $855.78.

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