SOLUTION: A business invests $25,000 in an account that earns 5% interest compounded annually. What is the balance in the account after 2 years?

Question 895973: A business invests $25,000 in an account that earns 5% interest compounded annually. What is the balance in the account after 2 years?
Answer by jim_thompson5910(35256) (Show Source): You can put this solution on YOUR website!
We'll use the formula

where

P = 25000 (the principal or initial balance)
r = 0.05 (interest rate as a decimal)
n = 1 (we're compounding 1 time per year)
t = 2 (for 2 years)

Plug in the given values (shown above)

The balance of the account in two years is $27,562.50
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