Ted invests 5,670 in a savings account with a fixed annual interest rate of 4% compounded 4 times per year will the account balance be after 4 years?

Question

Answer 1

To solve this problem, we need to use the formula for compound interest:

Where:-

is the amount of money accumulated after

years, including interest.-

is the principal amount (the initial amount of money).-

is the annual interest rate (in decimal).-

is the number of times that interest is compounded per year.-

is the time the money is invested for, in years.Given:-

-

(since the interest is compounded 4 times per year)-

yearsNow, plug these values into the formula:

First, calculate the term inside the parentheses:

So,

Next, raise this to the power of

:

Finally, multiply this by the principal amount

:

Therefore, the account balance after 4 years will be approximately \$6,605.23.

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