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Philip has $5,774 in a savings account. The interest rate is 13%, compounded annually.

To the nearest cent, how much interest will he earn in 5 years?

(compound interest formula)

Respuesta :

  • Principal (P) = $ 5774
  • Interest rate (r) = 13 %
  • Number of times the amount is compounded per time period (n) = 1
  • Time (t) = 5 years.
  • Let the compound interest be I.
  • Therefore,

[tex] \sf \: I = P(1 + \frac{r}{n} {)}^{nt} - P \\ \sf = 5774(1 + \frac{13}{100} ) ^{1 \times 5} - 5774 \\ \sf= 5774 \times ( \frac{113}{100} ) ^{5} - 5774 \\ \sf= 10638.22 - 5774 \\ \sf = 4864.22[/tex]

Answer:

$4864.22 (approximate value)

Hope you could get an idea from here.

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