Question

Steve deposited $5,000 in a saving account that pays 4% interest compounded annually. Which equation could be used to find the value of the account after 3 years

Answer 1

Answer:

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

A = 5000(1.04)^(t)

Future value A = $5,624.32

Step-by-step explanation:

The standard formula for compound interest is given as;

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

Where;

A = final amount/value

P = initial amount/value (principal)

r = rate yearly

n = number of times compounded yearly.

t = time of investment in years

For this case;

Since we want to determine the value that will be equivalent to $5,000 in 3years.

P = $5,000

t = 3years

n = 1

r = 4% = 0.04

Substituting into equation 1;

A = 5000(1.04)^(t)

A = 5000(1+0.04/1)^(1×3)

A = $5624.32