Suppose your​ friend's parents invest $20,000 in an account paying 4% compounded annually. What will the balance be after 7 ​years?

Question

Math

Answer 1

A=20(1+ .04)^7

= 1.04^7 = $26,318.64 rounded up to nearest penny

general formula is

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

where P = investment = 20K, t = years = 7, r= annual interest rate = 4%=.04, and n= number of compounding periods per year = 1, A = Amount it grew to, after 7 years at 4%, compounded one time per year