Find the value after five years of a $3,000 savings account that pays 3% interest compounded yearly. Round the answer to two decimal places. (1 point)
To find the value after five years of a savings account with compounded interest, we can use the formula:
A = P(1 + r/n)^(nt)
Where:
A = the future value of the investment/loan, including interest
P = the principal investment amount (initial deposit)
r = the annual interest rate (in decimal form)
n = the number of times that interest is compounded per year
t = the number of years the money is invested/lent for
In this case, we have:
P = $3,000
r = 3% = 0.03 (in decimal form)
n = 1 (interest is compounded yearly)
t = 5 years
A = 3000(1 + 0.03/1)^(1*5)
A = 3000(1 + 0.03)^5
A = 3000(1.03)^5
A ≈ $3,454.02
Therefore, the value after five years of a $3,000 savings account that pays 3% interest compounded yearly is approximately $3,454.02.