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How much money will be in a bank account after 3 years if $4 is deposited at an interest rate of 5%, and the interest is compounded annually?

How much money will be in a bank account after 3 years if $4 is deposited at an interest rate of 5%, and the interest is compounded annually?
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How much money will be in a bank account after 3 years if $4 is deposited at an interest rate of 5%, and the interest is compounded annually?

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User Adam Greene
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1 Answer

5 votes
The formula is the following :

4(1+0.05)^n
Since we are computing for 3 years, then n=3 and then we get:

4(1+0.05)^3\approx4.6
We get $4.6 after three years then.
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User Metakermit
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