Question

Please help!!! 40 pts The principal represents an amount of money deposited in a savings account subject to compound interest at the given rate. Find how much money will be in the account after the given number of years (Assume 360 days in a year.), and how much interest was earned. Principal: $9500 Rate:4.5% Compounded: Monthly Time: 4 years

Answer 1

Answer:  $11,369.74

Note: you may need to leave off the dollar sign and leave off the comma if you are typing the answer into a computer system.

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Explanation:

We'll use the compound interest formula

A = P*(1+r/n)^(n*t)

The variables are:

• A = account balance after t years
• P = deposit amount or principal
• r = interest rate in decimal form
• n = number of times the money is compounded per year
• t = number of years

In this case, we know the following values:

• P = 9500 is the deposit amount
• r = 0.045  since 4.5% = 4.5/100 = 0.045
• n = 12 because we're compounding monthly or 12 times a year
• t = 4 is the number of years

They are all plugged into the formula mentioned to get

A = P*(1+r/n)^(n*t)

A = 9500*(1+0.045/12)^(12*4)

A = 11369.7365854849

A = 11,369.74

After 4 years, there will be $11,369.74 in the account.

Side note: The info that "assume 360 days in a year" would only apply if we were compounding daily.