Answer:
see explanation below
Step-by-step explanation:
In this case, I don't know if the 4% rate is annual, so I'm going to assume that it's annual.
The other thing that I will assume is that this increase is constant but every year you get 4% interest of the amount that you have by the end of the year, and not 4% of the initial amount. However, I will do it by the two methods just in case.
If the amount is increased 4% every year then:
P = Po * (IV)^n
where n: year
To get the index variation (IV):
IV = 4/100 = 0.04, and we also know that every year is increased so:
1 + 0.04 = 1.04
Now let's get the money after 3 years:
P = 800 * (1.04)^3 = 899.89 $ or simply 900$
If the amount is increased 4% but over the initial amount always:
let's calculate the 4% of 800:
800 * 0.04 = 32
The first year it would be:
800 + 32 = 832 $
second year:
832 + 32 = 864$
third year: 864 + 32 = 896$
So, for the first assumption we get 900$ and the second assumption we get 896$.
