SOLUTION: Shawna opens a bank account with $400. The account accrues 8% interest compounded annually. How much money, to the nearest cent, will she have in her account at the end of 4 yea

Algebra ->  Customizable Word Problem Solvers  -> Finance -> SOLUTION: Shawna opens a bank account with $400. The account accrues 8% interest compounded annually. How much money, to the nearest cent, will she have in her account at the end of 4 yea      Log On

Ad: Over 600 Algebra Word Problems at edhelper.com


    

Question 1028614: Shawna opens a bank account with $400. The account accrues 8% interest compounded annually.
How much money, to the nearest cent, will she have in her account at the end of 4 years? (Use the formula A=P(1+rn)nt, where P= initial amount of money, r = interest rate, t = the number of years, and n = number of times the interest is compounded per year.) Round your answer to the nearest cent.
Shawna wants to calculate the amount she will earn between year 4 and year 8.
How much interest will Shawna earn during this time?


Answer by LinnW(1048) About Me  (Show Source):
You can put this solution on YOUR website!
A=P%281%2Br%2Fn%29%5E%28nt%29
A+=+400%281%2B%280.08%29%2F%281%29%29%5E%28%281%29%284%29%29
The (1) is the number of compounding periods per year
The (4) is the number of years.
A+=+400%281%2B0.08%29%5E4
A+=+544.20
The amount of interest is 544.20 - 400 = $144.20
Now determine the amount after a total of 8 years
A+=+400%281%2B0.08%29%5E8
New amount = 740.37
So between the end of year 4 and year 8
the increase is 740.37 - 544.20 = $196.17