If 7000 dollars is invested in a bank account at an interest rate of 10 per cent per year, find the amount in the bank account after 11 years if interest is compounded annually
Recall that
A = P(1+r)^t
Now plug in your numbers
To find the amount in the bank account after 11 years with annual compounding interest, we can use the formula for compound interest:
A = P(1 + r/n)^(nt)
Where:
A = the final amount in the bank account
P = the principal amount (initial investment), in this case, $7000
r = the annual interest rate, expressed as a decimal, in this case, 10% or 0.10
n = the number of times interest is compounded in a year, in this case, 1 (since it is compounded annually)
t = the number of years the money is invested for, in this case, 11 years
Plugging in the values, we get:
A = 7000(1 + 0.10/1)^(1*11)
Simplifying further:
A = 7000(1.10)^11
Calculating (1.10)^11:
A ≈ 7000 * 1.10^11
A ≈ 19371.0332
So, the amount in the bank account after 11 years, with an annual interest rate of 10% and compound interest, would be approximately $19,371.03.