Question

Well invested $4000 in an account that earns 5.5% interest, compounded annually. The formula for compound interest is A(t)= P(1+i)^t

How much did Arlo have in the account after 4 years?

Answer 1

$4,955.30

Explanation:

Using the formula A(t)= P(1+i)^t, we know:

A(t)-the total amount with interest earned

P-principal or initial deposit

i- interest rate in decimal form

t- time in years.

We substitute our values of P=4000, i=0.055 and t=4 to solve for A(t).

A(t)= 4000(1+0.055)^4

A(t)= 4000(1.055)^4

A(t)= 4000(1.23882)

A(t)=$4,955.30