Question

Charlotte has $6,367 in a savings account. The interest rate is 14%, compounded annually.To the nearest cent, how much will she have in 4 years?

Answer 1

Solution

Given the savings account, and solve for the interest:

Principal = $6,367

Interest rate = 14%

time = 4years

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

First, convert R as a percent to r as a decimal

r = R/100

r = 14/100

r = 0.14 rate per year,

Then solve the equation for A

$A=P(1+\frac{r}{n})^{nt}$$\begin{gathered} A=6367(1+\frac{0.14}{1})^{(1)(4)} \\ A=6367(1+0.14)^4 \\ A=10753.61 \end{gathered}$

A = $10,753.61

Therefore the correct answer is $10,753.61 (nearest cent)