Heather invested $8,000 4-year savings bond that pays 4.1% interest compounded annually. What is the value of the savings bond at the end of the 4 years?

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Heather invested $8,000 4-year savings bond that pays 4.1% interest compounded annually. What is the value of the savings bond at the end of the 4 years?

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Answer 1 · 2018-01-15T01:47:01

$F V = $ 9, 394.92$ $FV=$9,394.92$

Explanation:

Future amount at the end of 4 years will be calculated using the standard formula as follows:

$F V = P {(1 + i)}^{n}$ $FV=P(1+i)^n$
where:
$F V = future value$ $FV="future value"$
$P = principal = $ 8, 000$ $P="principal"=$8,000$
$i = interest rate = 4.1 % = 0.041$ $i="interest rate"=4.1%=0.041$
$n = number of years = 4$ $n="number of years"=4$

Now plug in provided data to the formula:

$F V = P {(1 + i)}^{n}$ $FV=P(1+i)^n$

$F V = $ 8, 000 {(1 + 0.041)}^{4}$ $FV=$8,000(1+0.041)^4$

$F V = $ 8, 000 {(1.041)}^{4}$ $FV=$8,000(1.041)^4$

$F V = $ 8, 000 (1.17436450976)$ $FV=$8,000(1.17436450976)$

$F V = $ 9, 394.92$ $FV=$9,394.92$

This means that the amount of $8,000 will earned an interest of $1,394.92 at an interest rate of 4.1% compounded annually.

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Heather invested $8,000 4-year savings bond that pays 4.1% interest compounded annually. What is the value of the savings bond at the end of the 4 years?

1 Answer

Explanation:

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