Question

Priscilla opens a savings account with a deposit of $8,100. Priscilla’s account pays 5% interest compounded annually. If Priscilla makes no deposits or withdrawals over the next 4 years, what will be the total amount in Priscilla's account at the end of the four years?

Answer 1

Answer: $10,556.89

Explanation:

Using the formula for compound interest:

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

where:

A = the total amount at the end of the investment period

P = the principal amount (the initial deposit)

r = the annual interest rate (as a decimal)

n = the number of times the interest is compounded per year

t = the number of years

In this case, P = $8,100, r = 0.05 (5% expressed as a decimal), n = 1 (compounded annually), and t = 4. Plugging in these values, we get:

A = 8100(1 + 0.05/1)^(1*4)

A = 8100(1.05)^4

A = $10,556.89 (rounded to the nearest cent)

Therefore, the total amount in Priscilla's account at the end of the four years will be $10,556.89.