Question

Lance puts $2500 in a savings account that pays 3.75% interest compounded yearly. How much money to the nearest dollar will be in the account 5 years later if he makes no more deposits or withdrawals?

Answer 1

`A=$3005`

Explanation:

Since this is a yearly interest problem, it can be modeled by
`A=P(1+r)^t` where `P` is principal (starting amount), `r` is rate in decimal form, `A` is the final amount, and `t` is time. Inputting knowns from the question:
`A=$2500(1+0.0375)^5` which simplifies to
`A=$3005.24...` Since we are rounding to the nearest dollar,
`A=$3005`