To determine how much money will be in a bank account after 5 years with an annual interest rate of 3%, you can use the formula for compound interest, which is:
\[ A = P(1 + r)^t \]
Where:
- \( A \) is the amount of money in the account after \( t \) years,
- \( P \) is the principal amount (the initial deposit),
- \( r \) is the annual interest rate (as a decimal),
- \( t \) is the number of years the money is invested or borrowed.
For your case:
- \( P = 1000 \) (the initial deposit),
- \( r = 0.03 \) (3% as a decimal),
- \( t = 5 \) (the number of years).
Plugging in these values, the equation becomes:
\[ A = 1000(1 + 0.03)^5 \]
This equation will allow you to calculate the amount in the account after 5 years. You can simplify it to:
\[ A = 1000(1.03)^5 \]
Now you can calculate \( (1.03)^5 \) to find the total amount after 5 years.
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