Question

Terrence opened a savings account and deposited $800.00 as principal. The account earns 12% interest. compounded annually. What is the balance after 8 years?​

Answer 1

After 8 years he now has 1975.47

Explanation:

1st year 12% of $800 is 96 so now its $896

2nd year 12% $896 is 107.52 896+107.52=1003.52

3rd year 12% of 1003.52 is 120.4224 since $ goes to hundredth place you round to 120.42 so $1120.94

4th year 12% of 1120.94 is 134.5128 again we round down to hundredth place so its 134.51 . 134.51+1120.94

5th year 12% of 1255.45 is 150.654 rounding down - 150.65. 150.65 + 1255.45 = 1406.10

6th year 12% of 1406.10 is 168.732 again we round down to 168.73 .168.73+1406.10=1574.83

7th year 12% of 1574.83 is 188.9796 rounded up to 188.98. 188.98+1574.83=1763.81

8th year 12% of 1763.81 is 211.6572 rounded up is 211.66. 211.66+1763.81=1975.47

we are rounding up / down because 5 and up rounds up and 4.9 and below rounds down

Answer 2

$1980.77

Explanation:

The balance can be found using the compound interest formula.

A = P(1 +r)^t . . . . principal P, annual rate r, compounded for t years

__

A = $800(1 +0.12)^8 ≈ $1980.77

The balance after 8 years is about $1980.77.