IXL - Compound interest: word problems (Precalculus practice)

Hanson puts $600.00 into an account to use for school expenses. The account earns 9% interest, compounded annually. How much will be in the account after 9 years?

Use the formula

where

is the balance (final amount),

is the principal (starting amount),

is the interest rate expressed as a decimal,

is the number of times per year that the interest is compounded, and

is the time in years.

Round your answer to the nearest cent.

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question

Austin opened a savings account and deposited $300.00 as principal. The account earns 2% interest, compounded annually. What is the balance after 10 years?

Use the formula

where

is the balance (final amount),

is the principal (starting amount),

is the interest rate expressed as a decimal,

is the number of times per year that the interest is compounded, and

is the time in years.

Round your answer to the nearest cent.

key idea

Compound interest:

is the balance (final amount).

is the principal (starting amount).

is the interest rate expressed as a decimal.

is the number of times per year that the interest is compounded.

is the time in years.

solution

You want to find the balance,

First, list the other variables in the equation

and specify their given values.

$300.00

0.02

once per year (annually)

10 years

Now plug these values into the equation and solve for

Plug in

300

0.02

and

300

0.02

Plug in

300

0.02

and

300

0.02

300

(

0.02

)

300

1.02

≈

365.698326

≈

Round to the nearest cent

$365.70

Round to the nearest cent

To the nearest

cent,

the balance is $365.70.

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Not feeling ready yet? These can help:

I.11Compound interest

B.3Evaluate variable expressions involving rational numbers

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