Question

Sam deposited $500 in a new

bank account. The bank pays 4% interest compounded annually on this account.
Sam makes no more deposits or withdrawals. What is the balance of the account at
the end of 5 years?
(Round to the nearest cent)

Answer 1

if the bank removes 4percent of what ever he has in his account every year for 5 years the first year would be

$500 of 4 percent which is$20

to get the amount of the first year we deduct $20 from $500 which is 480 this is for the first year.

for the second year we do the same thing by finding 4percent of $480

which is 19.2 when we deduct this from $480 we get

$460.8

the third year

$460.8 of 4 percent =18.432

we deduct it from $460.8=$442.368.

the fourth year

442.368 of 4 percent=17.69472

deduct it from 442.368=$424.67328.

the fifth year

424.67328 of 4 percent=16.9869312.

deduct it from 424.67328=$407.6863488.

ROUNDED TO THE NEAREST CENT IS=$407.70.

hope this helps.