Question

Stan’s savings account has a balance of $1986. after 23 years, what will the amount of interest be at 4% compounded annually? a. $2908.93 c. $2913.93 b. $2899.93 d. $794.40

Answer 1

a. $2908.93

Explanation:

We use the formula:

A = P( 1 + r)^t

P = $1986

r = 4% = 0.04

t = 23 years

Let's solve

A = 1986(1 + 0.04)^23

A = 1986( 1 + 0.04)

A = 1986( 1.04)^23

A = $4894.925

Now we take

$4894.925 - $1986 = $2908.925

$2908.925 round-up = $2908.93

So, the answer is A