Question

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

Answer 1

`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