Question

Find the balance in the account. $800 principal earning 7%, compounded annually, after 4 years

Answer 1

Formula for amount, A, in Compound Interest:

A = P(1 + r)ⁿ

Where P = Principal = $800, r = rate per year = 7% = 0.07, n = number of years = 4

A = P(1 + r)ⁿ

A = 800(1 + 0.07)⁴

A = 800(1.07)⁴ Use your calculator

A ≈ 1048.6368

A ≈ $1048.64

I hope this helped.

Answer 2

The amount A after 4 years is given by:

`A=800(1.07)^(4)=1048.64`
The answer is $1,048.64 rounded up to the nearest cent.