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Popular Word Problems >

Billy opened a savings account and deposited 1,000.00 as principal. The account earns 5% interest, compounded annually. What is the balance after 3 years?

Solution

B i ll y 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 1, 000.00 a s p r in c i p a l . T h e a cco u n t e a r n s 5% 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 3 ye a rs ?

Solution

Amount : 1157.625

Solution steps

Translate the problem into an equation:

A = 1000 (1 + \frac{0.05}{1})^{1 \cdot 3}

1000 (1 + \frac{0.05}{1})^{1 \cdot 3} = 1157.625

Amount : 1157.625

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