Question

you deposited $575 that you received for graduation into savings account that compounds annually. at the end of the first year you had $615 in the bank if you don't touch the money how much will you have when you graduate for college?( 4 years later)

Answer 1

Answer:

$\ 806.14$  

Step-by-step explanation:

we know that    

The compound interest formula is equal to  

$A=P(1+\frac{r}{n})^{nt}$  

where  

A is the Final Investment Value  

P is the Principal amount of money to be invested  

r is the rate of interest  in decimal

t is Number of Time Periods  

n is the number of times interest is compounded per year

Part 1)

Find the interest rate r

we have  

$t=1\ years\\ P=\ 575\\ r=?\\n=1\\A=\ 615$  

substitute in the formula above  and solve for r

$\ 615=\ 575(1+\frac{r}{1})^{1*1}$  

$\ 615=\ 575(1+r)$  

$r=(615/575)-1\\ \\ r=0.07$

The interest rate is 7%

Part 2)

we have  

$t=4\ years\\ P=\ 615\\ r=0.07\\n=1\\A=?$  

substitute in the formula

$A=\ 615(1+\frac{0.07}{1})^{1*4}$  

$A=\ 615(1.07)^{4}=\ 806.14$