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What will be the balance in the account after 4 years if a $4,200 deposit is earning 4.2% interest, compounded monthly? Please provide the answer rounded to the nearest cent.

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Final answer:

The balance in the account after 4 years with a $4,200 deposit at 4.2% interest compounded monthly will be approximately $4,944.41.

Step-by-step explanation:

The balance in the account after 4 years if a $4,200 deposit is earning 4.2% interest, compounded monthly can be calculated using the compound interest formula:

A = P(1 + r/n)(nt)

Where:

  • A = the future value of the investment/loan, including interest
  • P = the principal investment amount (the initial deposit)
  • r = the annual interest rate (decimal)
  • n = the number of times that interest is compounded per year
  • t = the time the money is invested for, in years

For this particular question:

  • P = $4,200
  • r = 4.2/100 = 0.042
  • n = 12 (since interest is compounded monthly)
  • t = 4 years

Hence, the equation becomes:

A = 4200(1 + 0.042/12)(12*4)

Plugging in the numbers:

A = 4200(1 + 0.0035)48

A = 4200(1.0035)48

A ≈ 4200 * 1.17724

A ≈ 4944.41

Therefore, the balance in the account after 4 years would be approximately $4,944.41, rounded to the nearest cent.

User Pierangelo Dal Ben
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