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Popular Word Problems >

Kinsley opened a savings account and deposited 400.00 as principal. The account earns 12% interest, compounded annually. What is the balance after 5 years?Round your answer to the nearest cent.

Solution

K in s l ey 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 400.00 a s p r in c i p a l . T h e a cco u n t e a r n s 12% 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 5 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 ce n t .

Solution

Amount : 704.94

Solution steps

Translate the problem into an equation:

A = 400 (1 + \frac{0.12}{1})^{1 \cdot 5}

400 (1 + \frac{0.12}{1})^{1 \cdot 5} = 704.93667 \dots

Round to the nearest hundredth:

704.94

Amount : 704.94

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