How much would $500 invested at 7% compounded annually be worth after 4 years, #A(t)=P(1+r/n)^(nt)#?

1 Answer
Dec 28, 2016

Answer:

#A(t)=$655.40# to 2 decimal places

Explanation:

They intend that #n# be the number incidents of calculating the interest in 1 year. So as it is only calculated once #n=1#

They intend that #r# be the percentage interest #r=7/100#
Note that #(7/100)/n = (7/100)/1 = 7/100#

They intend that #t# be the number of years.

They intend that #A(t)# be the sum of the principle sum (P) and any interest at time #t#

So:

#A(t)=P(1+r/n)^(nt) " "->" "A(t)=$500(1+7/100)^4#

#A(t)=$500xx(107/100)^4#

#A(t)=$655.398005#

#A(t)=$655.40# to 2 decimal places