suppose ivanna places $4500 in an account that pays 4% interest compounded each year. assume that no…

suppose ivanna places $4500 in an account that pays 4% interest compounded each year. assume that no withdrawals are made from the account. follow the instructions below. do not do any rounding. (a) find the amount in the account at the end of 1 year. $ (b) find the amount in the account at the end of 2 years. $

suppose ivanna places $4500 in an account that pays 4% interest compounded each year. assume that no withdrawals are made from the account. follow the instructions below. do not do any rounding. (a) find the amount in the account at the end of 1 year. $ (b) find the amount in the account at the end of 2 years. $

Answer

Explanation:

Step1: Recall compound - interest formula for 1 - year

The formula for compound interest when compounded annually is $A = P(1 + r)$, where $P$ is the principal amount, $r$ is the annual interest rate (in decimal form). Here, $P=$4500$ and $r = 0.04$. $A_1=4500\times(1 + 0.04)$

Step2: Calculate the amount after 1 year

$A_1=4500\times1.04 = 4680$

Step3: Recall compound - interest formula for 2 - years

For 2 years, the formula is $A = P(1 + r)^2$. Substitute $P = 4500$ and $r=0.04$. $A_2=4500\times(1 + 0.04)^2$

Step4: Calculate the amount after 2 years

$A_2=4500\times(1.04)^2=4500\times1.0816 = 4867.2$

Answer:

(a) $4680$ (b) $4867.2$