Question

Find the initial amount in the savings account and the amount after 4 years.

a) Initial amount: $500, Amount after 4 years: $541.22
b) Initial amount: $1.02, Amount after 4 years: $2040
c) Initial amount: $500, Amount after 4 years: $2040
d) Initial amount: $510, Amount after 4 years: $501.08

Answer 1

The initial amount is $500 and the amount after 4 years is $541.22.

Step-by-step explanation:

The formula for compound interest is:

Amount after n years = Principal × (1 + interest rate)n

For option a, the initial amount is $500 and the amount after 4 years is $541.22. We can use the formula to check if this is correct:

$541.22 = $500 × (1 + interest rate)4

By solving the equation, we find that the interest rate is approximately 0.0286, or 2.86%.

Therefore, the answer is option a) Initial amount: $500, Amount after 4 years: $541.22.