Question

Uncle Lee deposits $15000 in a bank that has an annual interest rate of 1.2%. What's the balance after 5 years if it is compounded yearly? (Round your answer to the nearest whole dollar)

Answer 1

In this case:

P = 15000

r = 1.2% = 0.012 in decimal

t = 5 years

n = 1 (compound once per year)

$A\text{ = 15000(1 + }\frac{0.012}{1})^{1(5)}=15000(1.012)^5=15000(1.061457384)\text{ = }15921.86$

Answer: (rounded to the nearest whole dollar) = $15,922