Suppose your​ friend's parents invest $ 25 comma 000 in an account paying 6 % compounded annually. What will the balance be after 7 ​years?

Question

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Part 1
The account balance will be ​$
  
enter your response here
​(Round to the nearest cent as​ needed.)

Answer 1

To calculate the balance after 7 years, we can use the formula for compound interest:

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

Where:
A = the final account balance
P = the principal amount (initial investment)
r = annual interest rate (in decimal form)
n = number of times interest is compounded per year
t = number of years

In this case, P = $25,000, r = 0.06, n = 1 (compounded annually), and t = 7.

Plugging these values into the formula, we get:

A = $25,000(1 + 0.06/1)^(1*7)

Simplifying further:

A = $25,000(1 + 0.06)^7
A = $25,000(1.06)^7
A ≈ $25,000(1.404928)

Calculating the value:

A ≈ $35,123.20

So, the balance after 7 years will be approximately $35,123.20.

Answer 2

your inncorect

Answer 3

I apologize for the mistake. Let's recalculate using the correct formula:

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

Where:
A = the final account balance
P = the principal amount (initial investment)
r = annual interest rate (in decimal form)
n = number of times interest is compounded per year
t = number of years

In this case, P = $25,000, r = 0.06, n = 1 (compounded annually), and t = 7.

Plugging these values into the formula, we get:

A = $25,000(1 + 0.06/1)^(1*7)

Simplifying further:

A = $25,000(1 + 0.06)^7
A = $25,000(1.06)^7
A ≈ $25,000(1.4401)

Calculating the value:

A ≈ $36,002.50

So, the balance after 7 years will be approximately $36,002.50.