Question

Shivani opened a savings account and deposited $300.00 as principal. The account earns 2% interest, compounded annually. What is the balance after 10 years?Round to the nearest cent.

Answer 1

Given:

Shivani opened a savings account and deposited $300.00 as principal.

So, P = 300

The account earns 2% interest

so, r = 2% = 0.02

compounded annually ⇒ n = 1

We will find the balance after 10 years, t = 10

So, we will use the following formula:

$A=P\cdot(1+\frac{r}{n})^{nt}$

Substitute with the given data:

$A=300\cdot(1+\frac{0.02}{1})^{1\cdot10}=300\cdot1.02^{10}=365.6983$

Rounding to the nearest cent

so, the answer will be the balance after 10 years = $365.70