Question

Fiona leaves $1600 in the bank for four years. It earns compound interest of 4% each year. Calculate the total amount Fiona has in the bank at the end of the four years

Answer 1

Answer:

A = $1,871.77

Step-by-step explanation:

A = P(1 + r/n)nt

Where,

A = Total money in the bank

P = principal = $1,600

r = interest rate = 4% = 0.04

n = number of periods = 1 year

t = time = 4 years

A = P(1 + r/n)^nt

A = 1,600(1 + 0.04/1)^1*4

A = 1,600(1 + 0.04)^4

= 1600(1.04)^4

= 1600(1.16985856)

= 1,871.773696

Approximately,

A = $1,871.77