Find the balance in the account: $3,000 principal, earning 3% compounding annually, after 4 years.
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 future value of the investment/loan, including interest
P = the principal investment amount (initial deposit or loan amount)
r = the annual interest rate (decimal)
n = the number of times that interest is compounded per year
t = the time the money is invested/borrowed for, in years
Given:
P = $3,000
r = 3% or 0.03
n = 1 (compounded annually)
t = 4 years
Plugging in the values:
A = $3,000(1 + 0.03/1)^(1*4)
A = $3,000(1.03)^4
A = $3,000(1.125508089)
A = $3,376.52
After 4 years, the balance in the account would be $3,376.52.