Question

A deposit of $3,000 is made in a savings account that pays 7.5 percent interest compounded annually. How much money will be available to the depositor at the end of 16 years?

Answer 1

Answer:

$9,542.38

Explanation:

Data provided in the question:

Deposit amount = $3,000

Interest paid by the savings account = 7.5% = 0.075

Time, n = 16 years

Now,

Using the compounding formula

Future value = Deposit × ( 1 + rate )ⁿ

or

Future value = $3,000 × ( 1 + 0.075 )¹⁶

or

Future value = $3,000 × 3.1808

or

Future value = $9,542.38