Asked by doge master
An investment account earns 4% per year compounded annually. If the initial investment was $4,000.00, how much is in the account after 3 years? Round your answer to the nearest dollar.
Im assuming that what i would do here is find out what 4 percent of 4,000 is, then add/multiply (not sure which one) by 3, then round.
Can someone please tell me what 4 percent of 4,000.00 is, and lemme know if this is the correct way to solve this problem?
Im assuming that what i would do here is find out what 4 percent of 4,000 is, then add/multiply (not sure which one) by 3, then round.
Can someone please tell me what 4 percent of 4,000.00 is, and lemme know if this is the correct way to solve this problem?
Answers
Answered by
Reiny
Your "4% per year compounded annually" is the give-away that you are dealing with compound interest.
amount = principal (1+i)^n
= 4000(1.04)^3
= 4000(1.124864) = 4499.46 or 4500 to the nearest dollar as asked for
What you were planning to do would be "simple interest"
.04(4000) = $160 per year
so for 3 years ---> $480
so using simple interest you would have $4480 , a difference of $20
amount = principal (1+i)^n
= 4000(1.04)^3
= 4000(1.124864) = 4499.46 or 4500 to the nearest dollar as asked for
What you were planning to do would be "simple interest"
.04(4000) = $160 per year
so for 3 years ---> $480
so using simple interest you would have $4480 , a difference of $20
Answered by
Reiny
Actually $4499.46 to the nearest dollar would be $4499
Answered by
doge master
This Actually helped alot thanks!!!!!!!
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