You deposit all of your graduation money, 2,560 , into an account earning 3.5% interest, compounded annually. You want to let it sit, no deposits or withdraws, while you are in college for 4 years. How much will you have at the end of 4 years?

Solution

Y o u d e p os i t a ll o f yo u r g r a d u a t i o n m o n ey, 2, 560, in t o an a cco u n t e a r nin g 3.5% in t eres t, co m p o u n d e d ann u a ll y . Y o u w an t t o l e t i t s i t, n o d e p os i t s or w i t h d r a w s, w hi l e yo u a re in co ll e g e f or 4 ye a rs . Ho w m u c h w i ll yo u ha v e a t t h e e n d o f 4 ye a rs ?

Amount : 2937.66

Solution steps

Translate the problem into an equation:

A = 2560 (1 + \frac{0.035}{1})^{1 \cdot 4}

2560 (1 + \frac{0.035}{1})^{1 \cdot 4} = 2937.65888 \dots

Round to the nearest hundredth:

2937.66

Amount : 2937.66