Question

9,400 dollars is placed in a savings account with an annual interest rate of 2.7%. If no money is added or removed from the account, which equation represents how much will be in the account after 4 years?

Answer 1

Explanation:

A=P(1+r/n)

nt

Where:

A is the future value of the account.

P is the principal amount (the initial amount you deposited), which is $9,400 in this case.

r is the annual interest rate (in decimal form), which is 2.7%, or 0.027.

n is the number of times that interest is compounded per year. If the interest is compounded annually, n is 1. If it's compounded quarterly, n is 4, etc.

t is the number of years the money is invested, which is 4 years in this case.

In your case, the interest is compounded annually, so

�

=

1

n=1. Plugging in the values:

�

=

9400

(

1

+

0.027

/

1

)

1

∗

4

A=9400(1+0.027/1)

1∗4

Simplify this equation:

�

=

9400

(

1.027

)

4

A=9400(1.027)

4

Now, calculate the future value:

�

=

9400

(

1.027

)

4

≈

9400

∗

1.110429

≈

10

,

435.15

A=9400(1.027)

4

≈9400∗1.110429≈10,435.15

So, after 4 years, there will be approximately $10,435.15 in the savings account.