Eliot opens a savings account with $5,000. He deposits $50 every month into the account that compounds annually and has a 0.95% interest rate. What will his account total be in 5 years?
Can someone tell me how to solve this??
5 years ago
1 year ago
To solve this problem, we need to use the formula for compound interest:
A = P(1 + r/n)^(nt)
where:
A = the final account total
P = the initial principal (the amount Eliot opens his savings account with)
r = the annual interest rate (expressed as a decimal)
n = the number of times interest is compounded per year
t = the number of years
In this case, Eliot opens the account with $5,000, and the annual interest rate is 0.95%. The interest is compounded annually.
Let's do the calculations step by step:
Step 1: Convert the interest rate to a decimal:
r = 0.95% = 0.95/100 = 0.0095
Step 2: Plug in the values into the formula:
A = 5000(1 + 0.0095/1)^(1*5)
Step 3: Calculate the exponent:
A = 5000(1.0095)^5
Step 4: Raise the base to the exponent:
A = 5000(1.04935800625)
Step 5: Calculate the final amount:
A = $5,246.79
Therefore, Eliot's account total will be $5,246.79 after 5 years.
1 year ago
To solve this problem, you can use the formula for compound interest:
A = P(1 + r/n)^(nt)
Where:
A = the future value of the investment/total amount in the account
P = the principal amount (initial investment)
r = annual interest rate (in decimal form)
n = number of times the interest is compounded per year
t = number of years
In this case, Eliot's initial deposit is $5,000 (P = $5,000). The annual interest rate is 0.95% (r = 0.95%/100 = 0.0095), and the compounding is done annually (n = 1). The investment period is 5 years (t = 5).
Plugging in these values, the equation becomes:
A = 5000(1 + 0.0095/1)^(1*5)
To calculate this, follow the steps below:
1. Add 0.0095/1 to 1: (1 + 0.0095/1) = 1.0095
2. Raise 1.0095 to the power of 1*5: 1.0095^5 ≈ 1.047763161
3. Multiply the result by the principal amount: 5000 * 1.047763161 ≈ $5,238.82
Therefore, Eliot's account total will be approximately $5,238.82 after 5 years.