You deposit 5000 to an account that earns 5% compounded annually for two years and 7% in all subsequent years. What has the account grown to in 5 years?
The balance of the account after 5 years, given an initial deposit of $5000 with an annual compound interest rate of 5% for the first two years and 7% for the remaining three years, can be calculated as follows:
- In the first two years, the balance would grow from $5000 to $5,250 at the end of the first year (5000 * (1 + 0.05) = $5250. At the end of the second year, it would be $5,512.5 (5250 * (1 + 0.05) = $5512.5.
For the following three years with a 7% annual interest rate, the balance at the end of the third year would be $5512.5 * (1 + 0.07)^3 ≈ $7155.16. The balance at the end of the fifth year, considering 7% annual interest, would be approximately $11,884.97.
So, after 5 years, the account would have grown to around $11,884.97.
