Question

Ash has $8,000 in a savings account. The interest rate is 3% compounded once a year. Write a formula that models the amount of money in Ash's savings account and find the amount of

money in his account after 4 years.

Answer 1

$8960

Explanation:

Answer 2

The amount of money in Ash's savings account after 4 years will be $9,004.

The formula to calculate the amount of money in Ash's savings account after compounding interest annually is
`A = P(1 + r/n)^((nt)).`

Here, A is the amount of money accumulated after n years, including interest.

P is the principal amount (the initial amount of money), r is the annual interest rate (decimal), n is the number of times that interest is compounded per year, and t is the time the money is invested for in years.

For Ash's case, the principal P is $8,000, the annual interest rate r is 3% or 0.03, interest is compounded once a year so n is 1, and we want to find out the amount after 4 years, so t is 4.

Using the formula, we get:

`A = 8000(1 + 0.03/1)^{(1*4)`

`A = 8000(1 + 0.03)^4`

`A = 8000(1.03)^4`

This simplifies to:

A = 8000 * 1.1255

A = $9,004

Therefore, the amount of money in Ash's savings account after 4 years will be $9,004.