Question

Calculate the balance after five years for the following account.
Account balance: $500.00
Interest: 4.95%
Type of Account: Compound Interest

Answer 1

Okay, I don't need the answer. I just need someone to show me how to get my answer because right now I am really confused on what to do to find my answer. Could anyone help me out?

Answer 2

\[M = P( 1 + i )^n\]
M is the final amount including the principal.
P is the principal amount.
i is the rate of interest per year.
n is the number of years invested.

Let's say you have $500 to invest at 4.95% for 5 years.

\[M = 500 ( 1+ .0495)^5 = 636.62\]

Answer 3

LAYMAN: STEP BY STEP
year 1:
Beg a/c bal-500 int.-(500*.0495)=24.75
ending a/c bal. =500+24.75=524.75 (this is next yrs opening balance)
Year 2:
beg a/c bal.524.75, int-(524.75*.0495)=25.975125
ending a/c bal= 524.75+25.975125=550.725125

year3:
beg a/c bal. 550.725125
int-(550.725125*.0495)=27.26089369
ending a/c bal.=550.725125+27.26089369=577.9860187


year 4:
beg a/c bal-577.9860187
int=(577.9860187*.0495)=28.61030793
ending a/c bal=606.5963266

year 5:

beg a/c bal=606.5963266
int=(606.5963266*.0495)=30.02651817

ENDING BALANCE=636.6228448