If you deposit $1'000 in a savings account that pays 4% compounded annually , compute the future value of your account after 4 years.

Question

BlackTom AI · Accepted Answer

Begin by identifying the future value (FV) formula for compound interest with annual compounding: FV = P × (1 + r)^n, where P is the principal, r is the annual interest rate, and n is the number of years.

Here, P = 1000, r = 0.04 (4%), and n = 4 years. Compute the growth factor: (1 + r)^n = (1.04)^4.

Calculate (1.04)^4 step by step: (1.04)^2 = 1.0816, and (1.04)^4 = (1.0816)^2 ≈ 1.16985856.

Multiply this factor by the principal: FV ≈ 1000 × 1.16985856 = 1169.85856.

Rounding to two decimal places (common for currency) gives FV ≈ 1169.86.

Summary: The future value after 4 years with 4% annual compounding is approximately 1169.86. Note that there were no answer options provided in this item, so the explanation focuses on the calculation steps and rounding rules used to reach the result.

If you deposit $1'000 in a savings account that pays 4% compounded annually , compute the future value of your account after 4 years.

View Explanation

Log in for full answers

Similar Questions

Part 1Consider a twominus−year investment: Given a constant and positive interest rate, the interest earned in the second year will be greater than the interest earned in the first year (assuming annual compounding). Part 1 True False

If Jack and Jill deposit $1,000 into a savings account that earns 4.5% annual interest (compounded monthly), how long will it take for their money to double to $2,000?

How much will you get back on a five year investment of $100 that pays 5% interest per year?

What is the effective yield (APY) if the Annual Percentage Rate (APR) is 7.64 percent and it is compounded quarterly?

If you deposit $10,000 in an account with an annual rate of 9% compounded semiannually, how long will it take for you to have $2,000,000 in the account?

In order to determine the future value of some lump sum, we must use the process of ________.

With compound interest, the investor earns interest on the principal amount invested plus interest on accumulated interest. Which of the following compounding frequencies would yield the investor the greatest ending balance assuming all else is equal?

You have located an investment that pays 9 percent per year. You invest $800. How much will you have in seven years? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.Blank.xlsx

More Practical Tools for Students Powered by AI Study Helper

Homework AI Solver

Stylized AI Paper Writer

Plagiarism Checker Assistant

Citation AI Academic Writing Tool

In-Class Translation Assistant

AI Note Generator

AI Quiz Answers

Past Exam Questions from University Test Bank

Smart Practice Assistant

Adaptive Practice

Making Your Study Simpler

If you deposit $1'000 in a savings account that pays 4% compounded annually , compute the future value of your account after 4 years.

View Explanation

Log in for full answers

Similar Questions

Part 1Consider a twominus−year ​investment: Given a constant and positive interest​ rate, the interest earned in the second year will be greater than the interest earned in the first year​ (assuming annual​ compounding). Part 1 True False

If Jack and Jill deposit $1,000 into a savings account that earns 4.5% annual interest (compounded monthly), how long will it take for their money to double to $2,000?

How much will you get back on a five year investment of $100 that pays 5% interest per year?

What is the effective yield (APY) if the Annual Percentage Rate (APR) is 7.64 percent and it is compounded quarterly?

If you deposit $10,000 in an account with an annual rate of 9% compounded semiannually, how long will it take for you to have $2,000,000 in the account?

In order to determine the future value of some lump sum, we must use the process of ________.

With compound interest, the investor earns interest on the principal amount invested plus interest on accumulated interest. Which of the following compounding frequencies would yield the investor the greatest ending balance assuming all else is equal?

You have located an investment that pays 9 percent per year. You invest $800. How much will you have in seven years? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.Blank.xlsx

More Practical Tools for Students Powered by AI Study Helper

Making Your Study Simpler

Part 1Consider a twominus−year investment: Given a constant and positive interest rate, the interest earned in the second year will be greater than the interest earned in the first year (assuming annual compounding). Part 1 True False