Answer:
The balance after four years is $1129.27
Step-by-step explanation:
The formula for compound interest, including principal sum, is
- A = the future value of the investment/loan, including interest
- P = the principal investment amount (the initial deposit or loan amount)
- r = the annual interest rate (decimal)
- n = the number of times that interest is compounded per unit t
- t = the time the money is invested or borrowed for
∵ $800 is deposited in an account
∴ P = 800
∵ The account pays 9% annual interest
∴ r = 9% = 9 ÷ 100 = 0.09
∵ The interest is compounded annually
∴ n = 1
∵ The time is 4 years
∴ t = 4
- Substitute the values of P, r, n, and t in the formula above
∵
∴
∴ A = 1129.265
∴ The balance after four years is $1129.27