Suppose 20,000 is deposited into an account paying 4.5% interest, compounded annually. How much money is in the account after four years if no withdrawals or additional deposits are made?

Solution

Suppose 20, 000 is deposited into an account paying 4.5% interest, compounded annually. How much money is in the account after four years if no withdrawals or additional deposits are made?

Solution

Amount : 23850.37

Solution steps

Translate the problem into an equation:

A = 20000 (1 + \frac{0.045}{1})^{1 \cdot 4}

20000 (1 + \frac{0.045}{1})^{1 \cdot 4} = 23850.37201 \dots

Round to the nearest hundredth:

23850.37

Amount : 23850.37

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