If $16400 is deposited into a CD paying 5.1% annually, how much will be in the account after 20 years? (round to nearest cent)

Question

I need help setting up the answer. I am horrible at word problems.

Answer 1

This looks like a compound interest problem.  We use the formula

 

A = P( + (r/n))^nt

 

where:

A = amount accumulated

P = deposit

r = interest rate

n = number of times compounded per year

t = time

 

Given:

P = 16400

r = 0.051

t = 20

n = 1

 

Plug in these values into the formula to solve for A.