a bank offers an investment account with an annual interest rate of 1.39% compounded annually. amanda…

a bank offers an investment account with an annual interest rate of 1.39% compounded annually. amanda invests $4100 into the account for 5 years. answer the questions below. do not round any intermediate computations, and round your final answers to the nearest cent. if necessary, refer to the list of financial formulas. (a) assuming no withdrawals are made, how much money is in amandas account after 5 years? $4398.36 (b) how much interest is earned on amandas investment after 5 years? $298.36

a bank offers an investment account with an annual interest rate of 1.39% compounded annually. amanda invests $4100 into the account for 5 years. answer the questions below. do not round any intermediate computations, and round your final answers to the nearest cent. if necessary, refer to the list of financial formulas. (a) assuming no withdrawals are made, how much money is in amandas account after 5 years? $4398.36 (b) how much interest is earned on amandas investment after 5 years? $298.36

Answer

Explanation:

Step1: Identify compound - interest formula

The compound - interest formula when compounded annually is $A = P(1 + r)^t$, where $P$ is the principal amount, $r$ is the annual interest rate (in decimal form), and $t$ is the number of years.

Step2: Convert the interest rate to decimal

$r=1.39%=0.0139$, $P = 4100$, and $t = 5$.

Step3: Calculate the amount in the account after 5 years

$A=4100\times(1 + 0.0139)^5=4100\times(1.0139)^5$. $(1.0139)^5=1.0139\times1.0139\times1.0139\times1.0139\times1.0139\approx1.07284$. $A = 4100\times1.07284=4498.644\approx4498.64$.

Step4: Calculate the interest earned

The interest earned $I=A - P$. $I=4498.64 - 4100=398.64$.

Answer:

(a) $$4498.64$ (b) $$398.64$