Bongiwe invests R15 000 in a savings account at 7,5% per annum compound interest calculate how much there will be in the savings account after 5 years show all steps

Answer 1

To calculate the amount in the savings account after 5 years with compound interest, we can use the formula:

A = P(1 + r/n)^(nt)

Where:
A = the amount of money accumulated after n years, including interest
P = the principal amount (initial investment)
r = the annual interest rate (in decimal form)
n = the number of times that interest is compounded per year
t = the number of years the money is invested for

Given:
P = R15 000
r = 7.5% = 0.075
n = 1 (compounded annually)
t = 5 years

Substitute the values into the formula:

A = 15,000(1 + 0.075/1)^(1*5)
A = 15,000(1 + 0.075)^5
A = 15,000(1.075)^5
A = 15,000(1.421087)
A = 21,316.30

Therefore, there will be R21 316.30 in the savings account after 5 years.