Question

Suppose your​ friend's parents invest $ 20000 in an account paying 7 % compounded annually. What will the balance be after 8 years?

Answer 1

Each year, the current balance is multiplied by 1.07.

After 8 years, we'll have multiplied it by 1.07 eight times.

This can be written as

$20000\times1.07^8$, which has a value of $34363.72, to the nearest cent.