Solve the following Compound Interest question:

Question

Adam put $2345 in the bank at 4.2% Interest Compounded annually. How much was in his account after 4 years?

Answer 1

the underlying formula you want to use here for compound interest is

A = P(1 + r/n)^(nt)

in this scenario that means taking

A = 2345(1 + 0.042)^4

A = 2345(1.1788)

A = 2764.48

meaning the amount in his account after 4 years is $2764.48

Answer 2

Hi Jacqueline,

Use the following Compound Interest Formula to solve this problem :

A = P ( 1 + r/n)^nt

^{Where A = final amount}

^{P = principal amount}

^{r = interest rate in decimal}

^{n = number of times interest is compounded per year}

^{t = number of years}

Substitute the following values in the above formula

p = $2345 r = 0.042 n = 1 t = 4

A = 2345(1 + 0.042/1) ¹⁽⁴⁾

= 2345(1.042)⁴

^{= 2345( 1.1788834637)}

^{= 2764.4817}

≈ 2764.48

So, he will have $2764.48 in his account after 4 years.

Hope this helps!

Answer 3

A=2345(1.042)^4

= $2,764.48 rounded to nearest cent

Answer 4

FV = 2345(1 + 0.042)⁴ = $2764.48