Ryan placed 1,000 in a savings account which compounds interest annually at a rate of 2.5% . How much will he have in the account after 2 years?Round your answer to the nearest dollar.Do NOT round until you have calculated the final answer.

Solution

R y an pl a ce d 1, 000 in a s a v in g s a cco u n t w hi c h co m p o u n d s in t eres t ann u a ll y a t a r a t e o f 2.5% . Ho w m u c h w i ll h e ha v e in t h e a cco u n t a f t er 2 ye a rs ? R o u n d yo u r an s w er t o t h e n e a res t d o ll a r . Do NOT ro u n d u n t i l yo u ha v e c a l c u l a t e d t h e f ina l an s w er .

Amount : 1050.625

Solution steps

Translate the problem into an equation:

A = 1000 (1 + \frac{0.025}{1})^{1 \cdot 2}

1000 (1 + \frac{0.025}{1})^{1 \cdot 2} = 1050.625

Amount : 1050.625