Question

A retiree invests $3,000 in a savings plan that pays 4% per year. What will the account balance be at the end of the first year?

Answer 1

The account balance at the end of the first year can be calculated using the formula for compound interest:

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

Where:

A = the final account balance

P = the initial investment ($3,000 in this case)

r = the annual interest rate (4% or 0.04 in decimal form)

n = the number of times interest is compounded per year (assuming it is compounded annually, n = 1)

t = the number of years (in this case, t = 1)

Substituting the values into the formula:

A = 3000(1 + 0.04/1)^(1*1)

A = 3000(1 + 0.04)^1

A = 3000(1.04)

A = $3,120

Therefore, the account balance at the end of the first year will be $3,120.

Explanation:

<3