Respuesta :
Answer:
The value of this investment at the end of the 5 years is of $662.5.
Step-by-step explanation:
Compound interest:
The compound interest formula is given by:
[tex]A(t) = P(1 + \frac{r}{n})^{nt}[/tex]
Where A(t) is the amount of money after t years, P is the principal(the initial sum of money), r is the interest rate(as a decimal value), n is the number of times that interest is compounded per year and t is the time in years for which the money is invested or borrowed.
Dina invests $600 for 5 years at a rate of 2% per year compound interest.
This means that [tex]P = 600, t = 5, r = 0.02, n = 1[/tex]. Thus
[tex]A(t) = P(1 + \frac{r}{n})^{nt}[/tex]
[tex]A(t) = 600(1 + \frac{0.02}{1})^{t}[/tex]
[tex]A(t) = 600(1.02)^t[/tex]
Calculate the value of this investment at the end of the 5 years.
This is A(5). So
[tex]A(5) = 600(1.02)^5 = 662.5[/tex]
The value of this investment at the end of the 5 years is of $662.5.
