Question

Bryan invests $500 in an account earning 4% interest that compounds annually. If hemakes no additional deposits or withdrawals, how much will be in the account:1. After 10 years?

Answer 1

Using the compound interest formula:

$\begin{gathered} A=P(1+\frac{r}{n})^{nt} \\ _{\text{ }} \\ _{} \end{gathered}$

Where:

P = Principal = 500

r = interest rate = 4% = 0.04

n = Number of times interest is compounded per year = 1

t = time = 10

so:

$\begin{gathered} A=500(1+\frac{0.04}{1})^{10\cdot1} \\ A\approx740.12 \end{gathered}$

Answer:

$740.12