Question

Suppose $4000 is invested at 6% interest compounded annually. How much money will there be in the bank at the end of 5 years? At the end of 20 years?

Answer 1

Answer: The accumulated amount after 5 years = $ 5352.90

The accumulated amount after 20 years = $ 12828.54

Step-by-step explanation:

Formula to find the accumulated amount after investing P amount at the rate of r ( in decimal) compounded annually for t years:

$A=P(1+r)^t$

As per given , we have

P =  $4,000

r= 6% = 0.06

Put thsese values in formula : $A=4000(1+0.06)^t=4000(1.06)^t$

The accumulated amount after 5 years = $A(5)=4000(1.06)^5$

$=4000(1.3382255776)=5352.9023104\\\\\approx5352.90$

Hence,  the accumulated amount after 5 years = $ 5352.90

The accumulated amount after 20 years = $A(20)=4000(1.06)^{20}$

$=4000(3.20713547221)=12828.5418888\\\\\approx12828.54$

Hence,  the accumulated amount after 20 years = $ 12828.54