Question

Kyle deposited $1200 in a savings account that earns 4.25% simple annual interest. If kyle keep the money in the account for 4 years what is the new balance?

Answer 1

If kyle keeps the money in the account for 4 years, the new balance is $1,417.37.

Explanation:

You can use the formula to calculate the future value to find the money in the account after 4 years:

FV=PV*(1+i)^n

FV= future value

PV= present value=$1,200

i= interest rate=4.25%=0.0425

n=number of periods of time=4

FV=1,200*(1+0.0425)^4

FV=1,200*(1.0425)^4

FV=1,417.37

According to this, the answer is that if kyle keeps the money in the account for 4 years, the new balance is $1,417.37.