Question

How much would $500 invested at 7% interest compounded annually be worth after 4 years? Round your answer to the nearest cent

Answer 1

If 7% interest is compounded annually, then the value of the $500
after 'Y' years in the future is
$500 (1.07)^to the 'y' power .

For this exercise, it's $500 (1.07)⁴ = $ 655.40 .

Answer 2

Answer: $655.40

Explanation:

Given : Principal amount = $500

The rate of interest compounded annually =7%=0.07

Time = 4 years

We know that compound amount after n years is given by :

`A=P(1+r)^n`

Thus for the given situation , the compounded amount after 4 years will be :-

`\\\Rightarrow\ A=500(1+0.07)^4\\\Rightarrow\ A=500(1.07)^4\\\Rightarrow\ A=\$655.398005\approx\$655.40........\text{to the nearest cent.}`