Sarah deposited $1,800 into a savings account that earns 4% compound interest (her money is compounded annually for 7 years), what is the ending balance in her account?Please show your work with a step-to-step guide below:
Accepted Solution
A:
Answer:$2368.68Step-by-step explanation:Use the equation for total amount involving compound interest:[tex]A = P(1 + \frac{r}{n} )^{t*n}[/tex]A is the total amount.P is the principle, the starting investment.r is the compound interest rate annually.n is number of compounding periods in a year.t is the number of years.Substitute the values known into the equation.[tex]A = 1800(1 + \frac{0.04}{1} )^{7*1}[/tex]Simplify.[tex]A = 1800(1 + 0.04)^{7}[/tex][tex]A = 1800(1 .04)^{7}[/tex]Solve.A = 2368.68 <= rounded to 2 decimal placesThe ending balance in her account is $2368.68.