Chapter 12.6, Problem 69STP

To determine

To calculate: the balance in dollars after 10 years.

Answer to Problem 69STP

After, 10 years balance will be $\$834$ .

Explanation of Solution

Given information:

The person deposit $\$500$ in an accounting earning $5.25\%$ annual interest. NO further deposits are made and the interest is compound annually.

Formula used:

Compound Interest Formula-

  $A=P{\left(1+\frac{r}{n}\right)}^{nt}$

  $\begin{array}{l}A=\text{ final amount}\\ P=\text{ initial principal balance}\\ r=\text{ interest rate}\\ n=\text{ number of times applied per time period}\\ t=\text{ number of time periods elapsed}\end{array}$

Calculation:

Consider ,

  $\begin{array}{l}P=\$500\\ r=5.25\%=0.0525\\ n=1\\ t=10\text{ years}\end{array}$

Now,

  $\begin{array}{l}=A=500{\left(1+\frac{0.0525}{1}\right)}^{(1)(10)}\\ =500{\left(1+0.0525\right)}^{10}\\ =500{\left(1.0525\right)}^{10}\end{array}$

  $A\approx \$834$

Hence, there will be $\$834$ balance in the account.