Answer:
If the bank offers an interest rate of 4% each month, you can calculate the total amount in the account after one year and two years 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 (initial deposit or loan amount)
r = the annual interest rate (decimal)
n = the number of times that interest is compounded per year
t = the number of years the money is invested or borrowed for
In this case:
P = $1,000 (the initial deposit)
r = 4% per month, or 0.04 as a decimal
n = 12 (since interest is compounded monthly)
t = 1 year for the first calculation, and 2 years for the second calculation.
After one year:
A = 1000(1 + 0.04/12)^(12*1)
A = 1000(1 + 0.0033333)^12
A ≈ 1000(1.0033333)^12
A ≈ 1000(1.04059406)
A ≈ $1,040.59
After two years:
A = 1000(1 + 0.04/12)^(12*2)
A = 1000(1 + 0.0033333)^24
A ≈ 1000(1.0033333)^24
A ≈ 1000(1.08454272)
A ≈ $1,084.54
So, after one year, you will have approximately $1,040.59 in the account, and after two years, you will have approximately $1,084.54 in the account.
Explanation:
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