SOLUTION: FV=4900(2.3) FV=$11270.00 This answer was given to me by: rfer13424, but it is incorrect. I have no idea where they got (2.3). This is the problem: To what amount will $4,900

Algebra ->  Customizable Word Problem Solvers  -> Finance -> SOLUTION: FV=4900(2.3) FV=$11270.00 This answer was given to me by: rfer13424, but it is incorrect. I have no idea where they got (2.3). This is the problem: To what amount will $4,900       Log On

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Question 806713: FV=4900(2.3)
FV=$11270.00
This answer was given to me by: rfer13424, but it is incorrect. I have no idea where they got (2.3). This is the problem: To what amount will $4,900 invested for 8 years at 11% compounded annually accumulate? Round to the nearest cent.
The correct answer is: $11,292.24
How did they get the correct answer?
Answer by richwmiller(17219) About Me  (Show Source):
You can put this solution on YOUR website!
$11,292.24 is correct
You want to calculate your new prinicpal from:
an initial investement of $4900
at 11% annual interest,
compounded 1 times per year,
after 8 year(s).
Before we start, be sure to convert your interest rate at the time of compounding, 11%, into a decimal by dividing it by 100, so 11% becomes 0.11 for calculation purposes.
Year 1, compounding time #1
Current principal is $4900.00
Interest earned on $4900.00 is $4900.00 × 0.11 = 539.00
This makes your new principal $4900.00 + $539.00 = $5439.00
Year 2, compounding time #1
Current principal is $5439.00
Interest earned on $5439.00 is $5439.00 × 0.11 = 598.29
This makes your new principal $5439.00 + $598.29 = $6037.29
Year 3, compounding time #1
Current principal is $6037.29
Interest earned on $6037.29 is $6037.29 × 0.11 = 664.10
This makes your new principal $6037.29 + $664.10 = $6701.39
Year 4, compounding time #1
Current principal is $6701.39
Interest earned on $6701.39 is $6701.39 × 0.11 = 737.15
This makes your new principal $6701.39 + $737.15 = $7438.55
Year 5, compounding time #1
Current principal is $7438.55
Interest earned on $7438.55 is $7438.55 × 0.11 = 818.24
This makes your new principal $7438.55 + $818.24 = $8256.79
Year 6, compounding time #1
Current principal is $8256.79
Interest earned on $8256.79 is $8256.79 × 0.11 = 908.25
This makes your new principal $8256.79 + $908.25 = $9165.03
Year 7, compounding time #1
Current principal is $9165.03
Interest earned on $9165.03 is $9165.03 × 0.11 = 1008.15
This makes your new principal $9165.03 + $1008.15 = $10173.18
Year 8, compounding time #1
Current principal is $10173.18
Interest earned on $10173.18 is $10173.18 × 0.11 = 1119.05
This makes your new principal $10173.18 + $1119.05 = $11292.23
In the end, $4900 has turned into $11292.23.
You have made $6392.23
the formula is
A = P(1 + r)^n
p =4900
r=11
n=8
a=4900(1+.11)^8