To calculate the balance in the account at the beginning of the third year, we can use the formula for compound interest:
A = P(1 + r/n)^(nt)
Where:
A = the amount of money accumulated after n years, including interest
P = principal amount ($1,400 in this case)
r = annual interest rate (7.5% or 0.075)
n = number of times interest is compounded per year (1 if compounded yearly)
t = number of years the money is invested for (3 years)
Plugging in the values:
A = $1,400(1 + 0.075/1)^(1*3)
A = $1,400(1.075)^3
A = $1,400(1.225506875)
A = $1,713.71
Therefore, the balance in Tim's account at the beginning of the third year would be $1,713.71.
Tim deposited $1,400 in a savings account that paid 7.5%
interest compounded yearly. What was the balance in his account at
the beginning of
the third year?
1 answer