Question

Catelyn invested $7000 in an account that earns 5.6% interest, compounded annually. The formula for compound interest is A(t) = P(1 + i)t.

How much did Catelyn have in the account after 4 years?

A. $8719.36
B. $8704.70
C. $8568.00
D. $10,920.00

Answer 1

Answer: B. $8704.70

Explanation:

Given : Principal amount (P)=$7000

Rate of interest (i) {in decimal} =
`(5.6)/(100)=0.056`

Time period (t)= 4 years

The formula for compound amount is
`A(t)=P(1+i)^t`

Now, the total amount in Catelyn's account after 4 years
`A(4)=7000(1+0.056)^4\\\Rightarrow\ A(4)=7000(1.056)^4\\\Rightarrow\ A(4)=7000(1.243528)\\\Rightarrow\ A(4)=8704.696\approx8704.70`

Hence, Catelyn have $8704.70 in her account after 4 years .

Answer 2

The answer to the problem is B. $ 8704.70.  The answer is derived as shown in the attached file.