A 4000.00 principal earns 5% interest compounded annually. After 4 years what is the balance in the account
To find the balance in the account after 4 years, we can use the formula for compound interest:
A = P(1 + r/n)^(nt)
Where:
A = the balance in the account after time t
P = the principal amount (4000.00 in this case)
r = the annual interest rate (5% or 0.05 as a decimal)
n = the number of times the interest is compounded per year
t = the number of years
In this case, since the interest is compounded annually, n = 1.
Plugging in the values, we have:
A = 4000(1 + 0.05/1)^(1*4)
A = 4000(1 + 0.05)^4
A = 4000(1.05)^4
A = 4000 * 1.21550625
A ≈ 4,862.03
Therefore, the balance in the account after 4 years is approximately $4,862.03.