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25 March, 05:11

5. Melanie put $5000 in a savings account that pays 1.25% interest compounded yearly. How much money will be in the account 10 years later if she makes no more deposits or withdrawals?

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  1. 25 March, 09:05
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    Answer: $5661 will be in the account 10 years later

    Step-by-step explanation:

    We would apply the formula for determining compound interest which is expressed as

    A = P (1+r/n) ^nt

    Where

    A = total amount in the account at the end of t years

    r represents the interest rate.

    n represents the periodic interval at which it was compounded.

    P represents the principal or initial amount deposited

    From the information given,

    P = 5000

    r = 1.25% = 1.25/100 = 0.0125

    n = 1 because it was compounded once in a year.

    t = 10 years

    Therefore,

    A = 5000 (1 + 0.0125/1) ^1 * 10

    A = 5000 (1.0125) ^10

    A = 5000 (1.0125) ^10

    A = $5661
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