high school algebra 2

Question

a bank account pays 4.2% interest compounded annually. Find the value of a 500 dollar deposit after 4 years.

Answer 1

To see how much we have at the end of 1 year we multiple 500 x 1.042=521 To see how much we have at the end of the second year we would multiple our new total again by 1.042 as we would be earning interest on our original amount plus the interest earned. This would equal 542.88 We could do this for years 3 and 4 to get our final answer so you see what we have done is the following computation 500 x 1.042 x 1.042 x 1.042 x 1.042 which is the same as 500 x (1.042)^ 4 which the way we really need to do this problem = 589.44