an amount of \$1,000 is deposited into a bank account that pays 4% interest compounded once a year. if there are no other withdrawals or deposits, what will be the balance of the account after 3 years

Solution

an am o u n t o f $1, 000 i s d e p os i t e d in t o a bank a cco u n t t ha t p a ys 4% in t eres t co m p o u n d e d o n ce a ye a r . i f t h ere a re n o o t h er w i t h d r a w a l s or d e p os i t s, w ha t w i ll b e t h e ba l an ce o f t h e a cco u n t a f t er 3 ye a rs

Amount : 1124.864

Solution steps

Translate the problem into an equation:

A = 1000 (1 + \frac{0.04}{1})^{1 \cdot 3}

1000 (1 + \frac{0.04}{1})^{1 \cdot 3} = 1124.864

Amount : 1124.864