Solve.
-A small business owner made $40,000 the first year he owned his store and made an additional 6% overthe previous year in each subsequent year. Find how much he made during his fourth year of business.Find his total earnings during the first four years. (Round to the nearest cent, if necessary.)
A)$47,640.64; $174,984.64
B)$8.64; $42,552.64
C)$163,840.00; $370,240.00
D)$262,144.00; $632,384.00

Question

Quizplus · Accepted Answer

The earnings for each year can be calculated using the formula for compound interest, $A = P(1 + r)^n$, where $A$ is the amount after $n$ years, $P$ is the principal amount, $r$ is the rate of increase, and $n$ is the number of years. For the fourth year, $P = \$40,000$, $r = 0.06$ (6%), and $n = 3$ (since we're calculating the increase over the previous year for the fourth year). The total earnings over the four years is the sum of the earnings for each year.

Solve. -A Small Business Owner Made $40,000 the First Year He