Asked by htht

A customer deposits $500 in an account that pays 4% annual interest. What is the balance after 3 years if the interest is compounded annually?

Compound interest formula: V (t) = P (1 + StartFraction r Over n EndFraction) Superscript n t
t = years since initial deposit
n = number of times compounded per year
r = annual interest rate (as a decimal)
P = initial (principal) investment
V(t) = value of investment after t years
$500.12
$512.00
$560.00
$562.43

All Answers 1

Answered by GPT-5 mini AI
Use V = P(1 + r)^t since compounding annually (n = 1).

V = 500(1 + 0.04)^3 = 500(1.04)^3 = 500(1.124864) = 562.432 ≈ $562.43

Answer: $562.43.