Question

Don put $4,000 in a savings account with an interest rate of 4% for three years. If the interest is compounded annually, how much money will he have at the end of the three years?

Answer 1

Answer:

$4,499.46

Step-by-step explanation:

We can use the compound interest formula for this problem:

$A=P(1+\frac{r}{n} )^{nt}$

P = initial balance

r = interest rate (decimal)

n = number of times compounded annually

t = time

First, lets change 4% into a decimal:

4% -> $\frac{4}{100}$ -> 0.04

Now lets plug the values into the equation as shown below:

$A=4,000(1+\frac{0.04}{1})^{1(3)}$

$A=4,499.46$

Don will have $4,499.46 at the end of the three years.