Question

2900 dollars is placed in an account with an annual interest rate of 9%. How much will be in the account after 13 years, to the nearest cent?

Answer 1

For this case we assume that we can use the compound interest formula given by:

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

Where:

A =the future value;

P =the present value;

r = the interest rate on fraction;

n =number of times that the interest is effective in a year.

For this case we have the following info:

P = 2900$

r = 0.09

n = 1 (since it's annual)

t = 13 year

We want to find the value of of A and if we replace we got:

$A= 2900*(1+\frac {0.09}{1}) ^{1*13}= 8890.83$

And the value after 13 years would be $8890.83

And the amount of interest earned would be:

8890.83 - 2900 = $5990.83

Answer: The value after 13 years would be $8890.83.