Question

Tyler's bank pays 7% a year interest on the previous year's balance. For the first year, Tyler had $2,000.00 on deposit at the bank. If each year Tyler does not withdraw any money, how much money will Tyler end up with after 4 years?

A. $2,000.00
B. $2,140.00
C. $2,297.40
D. $2,470.04

Answer 1

Tyler will end up with $2,653.02 after 4 years with a 7% annual interest rate on the previous year's balance.

Step-by-step explanation:

To calculate the amount of money Tyler will end up with after 4 years, we can use the formula for compound interest:

Amount = Principal x (1 + Interest Rate)^Time

In this case, the principal (initial deposit) is $2,000.00 and the interest rate is 7%.

After 1 year: Amount = $2,000.00 x (1 + 0.07)^1 = $2,140.00

After 2 years: Amount = $2,140.00 x (1 + 0.07)^1 = $2,297.40

After 3 years: Amount = $2,297.40 x (1 + 0.07)^1 = $2,470.04

After 4 years: Amount = $2,470.04 x (1 + 0.07)^1 = $2,653.02

Therefore, Tyler will end up with $2,653.02 after 4 years, so the answer is D. $2,470.04.