Question

Paula has a client who wants to invest into an account that earns 4% interest, compounded annually. The client opens the account with an initial deposit of $4,000, and deposits an additional $4,000 into the account each year thereafter.

Assuming no withdrawals or other deposits are made and that the interest rate is fixed, the balance of the account (rounded to the nearest dollar) after the eighth deposit is __________.

Answer 1

The balance of the account after the eighth deposit will be $36857 if an account that earns 4% interest, compounded annually.

What is compound interest?

It is defined as the interest on the principal value or deposit and the interest which is gained on the principal value in the previous year.

We can calculate the compound interest using the below formula:

$\rm A = P(1+\dfrac{r}{n})^{nt}$

Where A = Final amount

          P = Principal amount

          r  = annual rate of interest

          n = how many times interest is compounded per year

          t = How long the money is deposited or borrowed (in years)

P = 4000, r = 4% = 0.04 and an additional $4,000 into the account each year thereafter.

The balance of the account after the eighth deposit;

$A = \rm 4000\times \dfrac{1\times (1+0.04)^8}{1-(1+0.04)}$

A = 36856.90 ≈ $36857

Thus, the balance of the account after the eighth deposit will be $36857 if an account that earns 4% interest, compounded annually.

Learn more about the compound interest here:

brainly.com/question/26457073

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