Question

Alec invested $1500 in an account with annually compounded interest. The account earns 4% annual interest. How much will Alec have in his account after 4 years?

Answer 1

Answer:

He will have $1,754.79 in his account after 4 years

Step-by-step explanation:

We can use the compound interest formula to find how much money he will have after 4 years:

$A = P(1 + \frac{r}{n})^{nt}$ ;

where

A= final amount

P= initial amount

r= interest rate

n= number of times interest applied per time period

t= number of time periods elapsed,

so from the given information, we know that 1500 is our initial amount, so P= 1500.

Annual interest means once a year, so n= 1, and the interest rate is 4%, so r= 4% or 0.04

and we are asked to find the amount in his account after 4 years, so t= 4

Now, all we need to do is plug in these values for each of the variables and solve.

$A= 1500(1+\frac{0.04}{1} )^{(1)(4)}$

and we get

A= $1,754.79