Answer:
$157.50
Step-by-step explanation:
The equation you use for compound interest is:
[tex]A = P(1 + \frac{r}{n})^{nt}\\[/tex]
where:
A = final amount
P = initial principal balance
r = interest rate
n = number of times interest applied per time period
t = number of time periods elapsed
So for this question,
150 is our initial balance = P
5% is our interest rate = r
n = 1 because the interest is compounded annually per 1 year so 1 per year
t = 1 because we are calculating the balance after 1 year
Now we can plug these in and solve for the final amount (A).
[tex]A = 150 ( 1 + \frac{0.05}{1})^{1 * 1}[/tex]
remember that 5% is 5/100 so we put 0.05 for r
[tex]A = 150 (1.05)^{1}[/tex]
A = 150 (1.05)
A = 157.5
