Question

Michael invested $1800 into an account that pays 4% interest, compounded annually. What is the balance in his account after 2 years?

Answer 1

1,947

Step-by-step explanation:

1.04 * 1.04 = 1.0816

1800 * 1.0816 = 1,947

Answer 2

The amount after 2 years will be $1,946.88.

Step-by-step explanation:

`A=P(1+(R)/(n))^(nT)`

A = Amount after 'T' time period

P = Principal amount

R = Interest rate

n = Number of times interest applied per time period

We have:

P = $1,800

R =3%=0.034

n = 1

T = 2 years

`A=\$1,800* (1+(0.04)/(1))^(1* 2)`

`A=\$1,946.88`

The amount after 2 years will be $1,946.88.