A principal of $450 is deposited in an account that pays 2.5% interest compounded yearly. Find the account balance after 3 years rounded to the nearest cent.

Question

A principal of $450 is deposited in an account that pays 2.5% interest compounded yearly.  Find the account balance after 3 years rounded to the nearest cent.

johnweldon1993 · Answer

$$\large A = P(1 + \frac{ r }{ n })^{nt}$$

P = principal
r = rate in decimal form
n = number of times per year the interest is compounded
t = time in years

Can you solve this?

anonymous · Answer

is the r 2.5 ?

johnweldon1993 · Answer

Remember that is the percent form...to get the decimal form...put the number over 100

$$\large \frac{2.5}{100} $$

This comes out to.....$\large .025 $

anonymous · Answer

453.75 ??

johnweldon1993 · Answer

$$\large A = P(1 + \frac{ r }{ n })^{nt}$$

$$\large A = 450(1 + \frac{ .025 }{ 1 })^{1 \times 3}$$

$$\large A = 450(1.025 )^{3}$$

$$\large A = 450(1.076890625)$$

$$\large A = 484.6$$

Is what I get...see what I did?

anonymous · Answer

ohhh i get it now !!! is this rounded ?

anonymous · Answer

@johnweldon1993  ????

johnweldon1993 · Answer

That is rounded to the nearest cent as your question asks yes

anonymous · Answer

thanks.. how would you do this Membership is a local tennis club can be represented by the model, where t is the number of years since 2009.  What was the membership cost in 2011 rounded to the nearest cent?