If $30,000 is deposited in a savings account at the end of each year and the account pays interest of 5% compounded annually, what will be the balance of the account at the end of 10 years?

Question

Quizplus · Accepted Answer

To solve this problem, we need to use the formula for compound interest:

$A = P(1+r)^n$

where:
A = the final amount
P = the principal (initial amount)
r = the interest rate
n = the number of years

In this case, we have a principal of $30,000 deposited at the end of each year for 10 years, so our P is actually the sum of all deposits, which is:

$P = 30,000 + 30,000 + \dots + 30,000 = 300,000$

We also have an interest rate of 5%, which is expressed as a decimal:

$r = 0.05$

And we have a period of 10 years:

$n = 10$

Plugging these values into the formula, we get:

$A = 300,000(1+0.05)^{10} \approx 377,337$

Therefore, the balance of the account at the end of 10 years is $377,337. Answer choice C is the correct answer.

If $30,000 Is Deposited in a Savings Account at the End