Question

$53,000 is placed in an investment account that grows at a fixed rate of 2% (compound growth) per year. how much is in the account after four years? round your answer to the nearest whole number.

Answer 1

$57,369

Explanation:

We have been given that an amount of $53,000 is placed in an investment account that grows at a fixed rate of 2% (compound growth) per year. We are asked to find the amount in the account after 4 years.

To solve our given problem we will use compound interest formula.\

`A=P(1+(r)/(n))^(nt)`, where,

A = Final amount after t years,

P = Principal amount,

r = Annual interest rate in decimal form,

n = Number of times interest is compounded per year,

t = Time in years.

Let us convert our given rate in decimal form.

`2\%=(2)/(100)=0.02`

Upon substituting our given values in compound interest formula we will get,

`A=\$53,000(1+(0.02)/(1))^(1*4)`

`A=\$53,000(1+0.02)^(4)`

`A=\$53,000(1.02)^(4)`

`A=\$53,000*1.08243216`

`A=\$57368.90448\approx \$57,369`

Therefore, an amount of $57,369 will be in the account after 4 years.