Questions: Given the principal in a bank at the beginning of a year and a rate of interest that is compounded annually, calculate the amount in the account at the end of the year. 7,000 ; 4.5 percent If interest is compounded annually, what is the amount of money after t=1 years? (Round to the nearest cent.)

Solution Steps

We start with the principal amount \( P = 7000 \) dollars, the annual interest rate \( r = 4.5\% = 0.045 \), and the time period \( t = 1 \) year.

The formula for compound interest is given by:

\[ A = P \times (1 + r)^t \]

Substituting the known values into the formula:

\[ A = 7000 \times (1 + 0.045)^1 \]

Calculating the expression:

\[ A = 7000 \times (1.045) = 7000 \times 1.045 = 7315.0 \]

Final Answer