Answer :
Answer:
$717.81
Step-by-step explanation:
Compound Interest Formula (Yearly)
The formula that the problem refers to is,
[tex]A=P(1+\dfrac{r}{n} )^n^t[/tex],
where A is the amount, P is the principal or initial amount, r is the rate in decimal form, n is the number of times the interest is compounded in a year and t is the time that elapses in years.
Applying the Formula
Reading the problem, all the variables of the formula can be found,
- the $500 Pascale deposited is his principal amount or, P
- 0.075 is the 7.5% interest rate in decimal form or, r
- n = 1 as the problem states the interest being compounded annually or once a year
- t = 5 as the problem asks for the value of the account in 5 years.
Plugging all those values into the formula, the final answer is,
[tex]A=500(1+\dfrac{0.075}{1} )^1^(^5^)[/tex]
[tex]=500(1.075)^5\\\\\Longrightarrow A= 717.81[/tex].
