Heather invested $8,000 4-year savings bond that pays 4.1% interest compounded annually. What is the value of the savings bond at the end of the 4 years?

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Answer 1 · 2018-01-15T01:47:01

#FV=$9,394.92#

Future amount at the end of 4 years will be calculated using the standard formula as follows:

#FV=P(1+i)^n#
where:
#FV="future value"#
#P="principal"=$8,000#
#i="interest rate"=4.1%=0.041#
#n="number of years"=4#

Now plug in provided data to the formula:

#FV=P(1+i)^n#

#FV=$8,000(1+0.041)^4#

#FV=$8,000(1.041)^4#

#FV=$8,000(1.17436450976)#

#FV=$9,394.92#

This means that the amount of $8,000 will earned an interest of $1,394.92 at an interest rate of 4.1% compounded annually.