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Popular Word Problems >

Troy opened a savings account and deposited 700.00 as principal. The account earns 2% interest, compounded annually. What is the balance after 8 years?

Solution

T roy o p e n e d a s a v in g s a cco u n t an d d e p os i t e d 700.00 a s p r in c i p a l . T h e a cco u n t e a r n s 2% in t eres t, co m p o u n d e d ann u a ll y . Wha t i s t h e ba l an ce a f t er 8 ye a rs ?

Solution

Amount : 820.16

Solution steps

Translate the problem into an equation:

A = 700 (1 + \frac{0.02}{1})^{1 \cdot 8}

700 (1 + \frac{0.02}{1})^{1 \cdot 8} = 820.16156 \dots

Round to the nearest hundredth:

820.16

Amount : 820.16

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