Suppose that you deposit $1735.50 in a savings account that pays 9.25% annual interest with interest credited to the account at the end of each year. Assuming no withdrawals are made, find the balance in the account after 4 years
P = Po(1+r)^n.
Po = $1735.50.
r = 9.25%/100% = 0.0925 = APR expressed as a decimal.
n = 1Comp./yr * 4yrs = 4 Compounding
periods.
Plug the above values in the given Eq
and get:
P = $2472.35
To find the balance in the account after 4 years, we can use the formula for compound interest:
A = P * (1 + r/n)^(n*t)
Where:
A = the final amount
P = the principal amount (initial deposit)
r = the annual interest rate (as a decimal)
n = the number of times interest is compounded per year
t = the number of years
In this case, you deposited $1735.50, the annual interest rate is 9.25% (or 0.0925 as a decimal), interest is credited annually, and the time period is 4 years. Plugging in these values into the formula, we get:
A = 1735.50 * (1 + 0.0925/1)^(1*4)
A = 1735.50 * (1 + 0.0925)^4
A = 1735.50 * (1.0925)^4
A ≈ 2230.17
Therefore, the balance in the account after 4 years will be approximately $2230.17.