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Popular Word Problems >

You deposit 200 in an investment account that earns 4.5% annual interest compounded annually. You make no additional deposits or withdrawals. What is the balance of this account after 8 years?

Solution

Y o u d e p os i t 200 in an in v es t m e n t a cco u n t t ha t e a r n s 4.5% ann u a l in t eres t co m p o u n d e d ann u a ll y . Y o u mak e n o a dd i t i o na l d e p os i t s or w i t h d r a w a l s . Wha t i s t h e ba l an ce o f t hi s a cco u n t a f t er 8 ye a rs ?

Solution

Amount : 284.42

Solution steps

Translate the problem into an equation:

A = 200 (1 + \frac{0.045}{1})^{1 \cdot 8}

200 (1 + \frac{0.045}{1})^{1 \cdot 8} = 284.42012 \dots

Round to the nearest hundredth:

284.42

Amount : 284.42

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