Basic College Mathematics (9th Edition)

Published by Pearson
ISBN 10: 0321825535
ISBN 13: 978-0-32182-553-7

Chapter 6 - Percent - 6.8 Compound Interest - 6.8 Exercises: 7

Answer

$\$4587.79$

Work Step by Step

We use the interest formula (P=3500, r=0.07, t=1): $I=Prt$ And apply it to each of the 4 years, adding the previous year's interest to the principal each time. Year 1: $I=3500*0.07*1=245$ Year 2: $I=(3500+245)*0.07*1=262.15$ Year 3: $I=(3500+245+262.15)*0.07*1=280.50$ Year 4: $I=(3500+245+262.15+280.50)*0.07*1=300.14$ Thus the total compound amount is: $3500+245+262.15+280.50+300.14=\$4587.79$
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