SOLUTION: Tommy put $700 into a saving account that earns 4.5% interest compounded annually. How much money will be in Tommy's account after four years?

Question 1042483: Tommy put $700 into a saving account that earns 4.5% interest compounded annually. How much money will be in Tommy's account after four years?
Answer by Theo(13342) (Show Source): You can put this solution on YOUR website!
he's earning 4.5% interest per yer for 4 years.
the decimal equivalent of 4.5% is equal to 4.5/100 = .045.
you would multiply 700 by 1.045^4 to get the value in 4 years.
that would be equal to 834.76 dollars rounded to the nearest penny.

the formula if f = p * (1 + r) ^ n
f is the future value
p is the present amount
r is the interest rate per time period.
n is the number of time periods.

since the interest is compounded annually, then the time period is in years.
since the interest rate is already given per year, no adjustment is necessary other than making converting it to a decimal equivalent.
the number of time periods is already in years, so no adjustment was necessary for that either.

in your problem, p was equal to 700 and r was equal to .045 and n was equal to 4.

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