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Popular Word Problems >

Gwen opened a savings account and deposited 500.00 as principal. The account earns 3% interest, compounded annually. What is the balance after 8 years?

Solution

Gw e n 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 500.00 a s p r in c i p a l . T h e a cco u n t e a r n s 3% 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 : 633.39

Solution steps

Translate the problem into an equation:

A = 500 (1 + \frac{0.03}{1})^{1 \cdot 8}

500 (1 + \frac{0.03}{1})^{1 \cdot 8} = 633.38504 \dots

Round to the nearest hundredth:

633.39

Amount : 633.39

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