Question

Melissa put her $500 In a savings account that earns 4% interest compounded annually. How much will be in the account after 3 years? Round your answer to the nearest hundredth

Answer 1

Answer: $562.43

Explanation:

The initial start up amount is 500 and we want to expressed this as an exponential function. So since we know the initial value we need to find the rate of change. So if you earn 4% interest you are earning 4% percent more on top the actual 100%.

So 100% + 4 % = 104% = 1.04

The common difference is 1.04.

so 500 * 1.04^n= A where n is the number of years and A is the total amount.

A = 500 *
`1.04^(3)`

A= 562.43

Answer 2

Answer: $562.43

Work Shown:

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

A = 500*(1+0.04/1)^(1*3)

A = 562.432

A = 562.43