Question

Lisa deposits $625 in an account that earns 4% interest

annually. How much money is in the account
compounded
after 3 years? (8.12D)

Answer 1

$703.04

Explanation:

The equation for this is 625 x
`1.04^(years\\)`.

So using the formula 625 x
`1.04^(3)` = $703.04

Answer 2

$703.04

Explanation:

Compound interest formula

`\sf A=P(1+(r)/(n))^(nt)`

where:

• A = final amount
• P = principal
• r = interest rate (in decimal form)
• n = number of times interest applied per time period
• t = number of time periods elapsed

Given:

• P = $625
• r = 4% = 0.04
• n = 1
• t = 3

Substituting given values into the formula:

`\implies \sf A=625(1+(0.04)/(1))^(3)`

`\implies \sf A=625(1.04)^(3)`

`\implies \sf A=703.04`