QuestionAugust 16, 2025

What is the balance after 2 years in a savings account with an initial investment of 1,400 and a 5% annual compound interest rate? Balance= [?]

What is the balance after 2 years in a savings account with an initial investment of 1,400 and a 5% annual compound interest rate? Balance= [?]
What is the balance after 2 years in a savings account with an initial investment of 1,400 and a 5% annual compound interest rate? Balance= [?]

Solution
4.7(234 votes)

Answer

Balance = \ 1543.50 Explanation 1. Identify the Compound Interest Formula Use **A = P(1 + \frac{r}{n})^{nt}** where A is the amount, P is the principal, r is the annual interest rate, n is the number of times interest applied per time period, and t is the time in years. 2. Substitute Values into the Formula Here, P = 1400, r = 0.05, n = 1, and t = 2. Substitute these values: A = 1400(1 + \frac{0.05}{1})^{1 \times 2}. 3. Calculate the Balance Simplify the expression: A = 1400(1.05)^2 = 1400 \times 1.1025. 4. Compute the Final Amount Multiply to find A: A = 1543.50.

Explanation

1. Identify the Compound Interest Formula<br /> Use **$A = P(1 + \frac{r}{n})^{nt}$** where $A$ is the amount, $P$ is the principal, $r$ is the annual interest rate, $n$ is the number of times interest applied per time period, and $t$ is the time in years.<br /><br />2. Substitute Values into the Formula<br /> Here, $P = 1400$, $r = 0.05$, $n = 1$, and $t = 2$. Substitute these values: $A = 1400(1 + \frac{0.05}{1})^{1 \times 2}$.<br /><br />3. Calculate the Balance<br /> Simplify the expression: $A = 1400(1.05)^2 = 1400 \times 1.1025$.<br /><br />4. Compute the Final Amount<br /> Multiply to find $A$: $A = 1543.50$.
Click to rate:

Similar Questions