Question

Suppose that $4000 is placed in an account that pays 13% interest compounded each year.Assume that no withdrawals are made from the account.Follow the instructions below. Do not do any rounding.(a) Find the amount in the account at the end of 1 year.sil(b) Find the amount in the account at the end of 2 years

Answer 1

Given that,

$4000 is placed in an account that pays 13% interest compounded each year.

a) Find the amount in the account at the end of 1 year.

we know that,

Amount after n years under compound interest rate r%,

`=P(1+(r)/(100))^n`

Put n=1, we get

`=4000(1+(13)/(100))`
`=4000((113)/(100))`
`=4,520`

Amount in the account at the end of 1 year will be $4,520.

b) Find the amount in the account at the end of 2 years​

Put n=2, we get

`=4000(1+(13)/(100))^2`
`=4000((113)/(100))^2=5,107.6`

Amount in the account at the end of 2 years​ is $5,107.6