Question

A bank account balance, b, for an account starting with s dollars, earning an annual interest rate, r, and left untouched for n years can be calculated as b=s(1+r)^n. Find a bank account balance to the nearest dollar, if the account starts with $200, has an annual rate of 4%, and the money left in the account for 10 years.

Answer 1

Here s=$200, r=0.04 and t=10.

Thus, the balance after 10 years will be:

b = ($200)(1+0.04)^10 = ($200)(1.48) = $296.05.

We assume compounding once each year.