Question

Sally opens a bank account with $500. The account accrues 5% interest compounded annually. How much money will she have in her account at the end of 4 years? (Use the formula A=P(1+rn)nt , where P = initial amount of money, r = interest rate, t = the number of years, and n = number of times the interest is compounded per year.) (Round to the nearest cent) 

(IT IS 24 Points)

Answer 1

500 x 1.05^4

it's 4 periods because the interest rate is compounded yearly. 5 percent yearly increase is equal to P x 1.05