If a lump-sum deposit of $8,000 is left in a bank for 12 years at 9%, compounded annually, what will the ending balance be? (Round the answer to the nearest dollar.)

Question

Quizplus · Accepted Answer

The ending balance can be calculated using the formula for compound interest: A = P(1 + r/n)^(nt), where A is the amount of money accumulated after n years, including interest, P is the principal amount ($8,000), r is the annual interest rate (9% or 0.09), n is the number of times that interest is compounded per year (1, since it's compounded annually), and t is the time the money is invested for in years (12). Plugging in the values: A = 8000(1 + 0.09/1)^(1*12) = 8000(1.09)^12 ≈ $22,501 when rounded to the nearest dollar.

If a Lump-Sum Deposit of $8,000 Is Left in a Bank