Lolita deposited 500 in her savings account that earns 5% intrest compounded anually. She forgot about it until now, 15 years later, when she came across an old bank statement.

Question

Wade Knight

Mathematics

21 April, 06:06

Lolita deposited 500 in her savings account that earns 5% intrest compounded anually. She forgot about it until now, 15 years later, when she came across an old bank statement.

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Answers (1)

Know the Answer?

Winston · Answer 1

P = 1039.5

Step-by-step explanation:

Given:-

- The initial amount deposited, Po = 500

- The interest rate applied, I = 5% compounded annually

Find:-

- The amount on her bank statement after 15 years?

Solution:-

- We see that the principal amount increases every year and no transactions have been made in the course of 15 years.

The total amount left in her savings account would be given by the following formula:

P = Po * (1 + I/100) ^n

- Where, n = number of years passed since deposit. (15 years)

P = 500 * (1 + 5/100) ^15

P = 500 * (1.05) ^15

P = 1039.5