Question

A home improvement firm has quoted a price of? $9,800 to fix up? eric's backyard. five years? ago, eric put? $7,500 into a home improvement account that has earned an average of? 5.25% per year. does eric have enough money in his account to pay for the backyard fixminus??up?

Answer 1

The amount of money that Eric will have after 5 years given the initial amount and the interest per year (which we will assume to be compounded)

                                    F = P x (1 + r)^n

Substituting,

                                    F = ($7,500)(1 + 0.0525)^5

                                    F = $9,686

Therefore, Eric will be short of about $113.39.