Question

Jennifer deposits $1,000 into an account that is compounded monthly for 4 years. The account earns 7% interest. What is the ending balance in the account at the end of the 4 years (assuming no new deposits or withdrawals)? SHOW THE WORK PLEASE ​

Answer 1

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Answer:

$1,322.05

Explanation:

The compound interest formula is appropriate.

A = P(1 +r/n)^(nt) . . . principal P earning annual rate r for t years, compounded n times per year

You have P=1000, r=.07, n=12, t=4, so the balance is ...

A = $1000(1+.07/12)^(12·4) ≈ $1000(1.322054)

A = $1,322.05

Jennifer's ending balance is $1,322.05.