Find Amount After Compound Interest Word Problems Worksheet

Algebra 2
Exponential Functions

Total questions - 6

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How Will This Worksheet on "Find Amount After Compound Interest Word Problems" Benefit Your Student's Learning?

  • Helps grasp how compound interest impacts money saved or invested, important for managing personal finances.
  • Uses math to solve real-life problems like loans, investments, and savings, making financial concepts easier to understand.
  • Develops skills to handle complex financial scenarios with varying interest rates and compounding frequencies.
  • Encourages looking at different ways interest is added to decide how best to plan for the future.
  • Makes math skills stronger by using formulas to solve real problems and figure out how much money can be made.
  • Shows how to guess how much money will be saved or invested in the future using compound interest.

How to Find Amount After Compound Interest Word Problems?

  • Note the principal amount P, annual interest rate r, number of times interest compounds per year n, and time period t in years.
  • Utilize A=P(1+rn)nt to calculate the final amount A after compound interest.
  • Substitute the values into the formula and perform the calculations sequentially to find the total amount including interest.
  • Understand the meaning of the final amount A within the context of the problem, considering how compound interest affects the principal over time.

Solved Example

Q. Steven opened a savings account and deposited $100.00 as principal. The account earns 9% interest, compounded annually. What is the balance after 5 years?Use the formula A=P(1+rn)nt, where A is the balance (final amount), P is the principal (starting amount), r is the interest rate expressed as a decimal, n is the number of times per year that the interest is compounded, and t is the time in years.Round your answer to the nearest cent.
Solution:
  1. Identify Variables: Identify the values for the variables in the compound interest formula A=P(1+rn)nt. Here, P=$100 (the principal), r=9% or 0.09 (the interest rate as a decimal), n=1 (since the interest is compounded annually), and t=5 years (the time period).
  2. Substitute Values: Substitute the values into the compound interest formula. A=100(1+(0.09)/(1))(1×5)
  3. Simplify Expression: Simplify the expression inside the parentheses and then calculate the exponent. A=100(1+0.09)5A=100(1.09)5
  4. Calculate Exponent: Calculate the value of (1.09)5.(1.09)51.53862 (rounded to five decimal places for intermediate calculation)
  5. Find Final Balance: Multiply the principal by the result from Step 4 to find the final balance.A=100×1.53862A153.862
  6. Round Final Balance: Round the final balance to the nearest cent. A$(153.86)
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About Worksheet

Algebra 2
Exponential Functions

Find amount after compound interest word problems involve calculating total funds accrued with compound interest, using A=P(1+rn)nt. Here, A is the final amount, P is the principal, r is the annual interest rate, n is the number of times interest compounds per year, and t is time in years. Explore examples in find amount after compound interest word problems pdf for detailed practice and solutions.

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