Question

A savings account accrues interest at a rate of 7.0% yearly. If someone opens an account with $20,000, how much money would the account have after 4 years?

A. $1,400.00 B. $22,898.00 C. $24,500.86 D. $26,215.92

Answer 1

To calculate the final amount of money in the savings account after a certain number of years with compound interest, use the formula A = P(1 + r/n)^(nt). Plugging in the given values, the savings account would have approximately $26,215.92 after 4 years.

Step-by-step explanation:

To calculate the amount of money a savings account would have after a certain number of years, we can use the formula for compound interest: A = P(1 + r/n)^(nt), where A is the final amount, P is the initial principal (starting amount), r is the interest rate (in decimal form), n is the number of times interest is compounded per year, and t is the number of years.

In this case, the initial principal is $20,000, the interest rate is 7%, the interest is compounded yearly, and the time is 4 years. Plugging these values into the formula, we get: A = 20000(1 + 0.07/1)^(1 * 4).

Calculating this expression gives us the final amount in the savings account after 4 years, which is approximately $26,215.92.

Answer 2

I = PRT/100
I = 20000*7*4/100
I = 5600

There would be $5,600 + $20,000 = $25,600 in the account at the end of the four years