Step 1: Write out the compound interest formula
[tex]A=P(1+\frac{r}{n})^{nt}[/tex][tex]\begin{gathered} \text{ Where} \\ A=\text{ the final amount after time t} \\ P=\text{ the initial principal balance} \\ r=\text{ interest rate} \\ n=\text{ the number of times the interest is applied per time period} \\ t=\text{ the number of time periods elapsed} \end{gathered}[/tex]Step 2: Write out the given values and substitute them into the formula to find the balance
[tex]\begin{gathered} P=\text{ \$2525} \\ r=5\text{ \%}=0.05 \\ t=7\text{years} \\ n=1 \end{gathered}[/tex][tex]\begin{gathered} \text{Hence,} \\ A=2525(1+\frac{0.05}{1})^{1\times7} \\ A=2525\times1.05^7=3552.93 \end{gathered}[/tex]Hence, the balance after seven years is $3552.93
