Question

suppose that you have a savings account with 8500 in it. it pays 7% interest compound as shown below. find the value for the next 4 years

Answer 1

We want find the compound interest annualy for 4 years, $8500, at 7%'

The formula for the compound amount over one year is;

`A=P(1+(r)/(100))`

1st year:

`\begin{gathered} A=8500(1+0.07) \\ A=\text{ \$9095} \end{gathered}`

2nd year:

`\begin{gathered} A=9095(1.07) \\ A=\text{ \$9731.65} \end{gathered}`

3rd year:

`\begin{gathered} A=9731.65(1.07) \\ A=\text{ \$10412.87} \end{gathered}`

4th year:

`\begin{gathered} A=10412.87(1.07) \\ A=\text{ \$11141.77} \end{gathered}`