a principal of $450 deposited in an account that pays 2.5% interest compounded yearly. find the account balance after 2 years
Accepted Solution
A:
Answer:The amount is $472.93 and the interest is $22.93.Step-by-step explanation:STEP 1: To find amount we use formula:A=P(1+rn)n⋅tA = total amount P = principal or amount of money deposited,r = annual interest rate n = number of times compounded per yeart = time in yearsIn this example we haveP=$450 , r=2.5% , n=2 and t=2 yearsAfter plugging the given information we haveAAAA=450(1+0.0252)2⋅2=450⋅1.01254=450⋅1.050945=472.93STEP 2: To find interest we use formula A=P+I, since A=472.93 and P = 450 we have:A472.93II=P+I=450+I=472.93−450=22.93