A principal of $500 is invested in an account at 7% per year compounded annually. what is the total amount of money in the account after 5 years?

Hello! The formula for compound interest is P (1 + r) ^t. P = principal (initial amount), r = rate (interest rate), and t = time (years). Let's start by adding 1 to the interest rate. 7% is 0.07 in decimal form. 1 + 0.07 is 1.07. The amount of time is 5 years. We raise 1.07 to the 5th power. 1.07^5 is 1.402551731. This is a long decimal, but do not delete it from your calculator. Now, let's multiply that number by the principal, which is $500. When you multiply the decimal by 500, you get 701.2758654 or 701.28 when rounded to the nearest hundredth. There. The total amount of money in the account after 5 years is $701.28.