Chapter 7, Problem 30CT

To determine

To Calculate: The balance amount of a deposit that earns an interest compounded annually.

Answer to Problem 30CT

The balance of the account after $2$ years is $\$1872.72$

Explanation of Solution

Given Information: The principal amount is $\$1800$ , the annual interest rate is $2\%$ compounded annually and the time is $2$ years.

Formula Used:$A=P{\left(1+r\right)}^{\text{t}}$

Where, $A$ is the balance amount, $P$ is the initial deposit amount, $r$ is the annual interest as a decimal and $t$ is the time in years.

Calculation: The annual interest rate $2\%$ written as a decimal is $0.02$

Put the given values in the formula to write

  $\text{A}=1800\cdot {\left(1+0.02\right)}^2=1800\times 1.0404=1872.72$

Therefore, the balance of the account after $2$ years is $\$1872.72$