Answer :
If 7% interest is compounded annually, then the value of the $500
after 'Y' years in the future is
$500 (1.07)^to the 'y' power .
For this exercise, it's $500 (1.07)⁴ = $ 655.40 .
after 'Y' years in the future is
$500 (1.07)^to the 'y' power .
For this exercise, it's $500 (1.07)⁴ = $ 655.40 .
Answer: $655.40
Step-by-step explanation:
Given : Principal amount = $500
The rate of interest compounded annually =7%=0.07
Time = 4 years
We know that compound amount after n years is given by :
[tex]A=P(1+r)^n[/tex]
Thus for the given situation , the compounded amount after 4 years will be :-
[tex]\\\Rightarrow\ A=500(1+0.07)^4\\\Rightarrow\ A=500(1.07)^4\\\Rightarrow\ A=\$655.398005\approx\$655.40........\text{to the nearest cent.}[/tex]