Question

Maddie deposited $7,734 in a savings account earning 12% interest, compounded annually.To the nearest cent, how much will she have in 3 years?

Answer 1

SOLUTION

The formula to calculate the amount(A) which is compounded annually is,

$A=P(1+r)^t$

Given:

$\begin{gathered} P=Pr\text{incipal amount}=\text{ \ 7,734} \\ r=12\%=\frac{12}{100}=0.12 \\ t=3 \end{gathered}$

Therefore,

$\begin{gathered} A=7,734(1+0.12)^3=10865.71315\approx10.865.71(nearest\text{ cent)} \\ \therefore A=\text{ \ }10.865.71 \end{gathered}$

Hence, the answer is $10,865.71.