Question

$800 is deposited in an account that pays 9% annual interest compounded annually. Find the balance after four years

Answer 1

Answer:

$1,129.27

Step-by-step explanation:

Compounded interest formula is

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

Where $A$ is the final amount, $P$ is the principal, $r$ is the anual interest in decimal, $n$ is the numer of compounded periods in one year and $t$ is the time in years.

$P=\ 800\\r=0.09\\n=1\\t=4$

Notice that $n=1$, because the interest is compounded anually, if the interest is compounded, then $n=12$, because there would be 12 compound periods in one year.

Then, we replace all these vaules in the formula

$A=P(1+\frac{r}{n})^{nt}\\A=800(1+\frac{0.09}{1})^{1(4)}=800(1.09)^{4}\\ A=1,129.26$

Therefore, after 4 years, the amount would be $1,129.27.