Answer:
approximately $1382.70.
Step-by-step explanation:
To calculate the balance in Bob's account at the end of 4 years with compound interest, we can use the formula for compound interest:
A = P(1 + r/n)^(nt)
Where:
A = the future value of the investment/loan, including interest
P = the principal investment amount (the initial deposit or loan amount)
r = the annual interest rate (in decimal)
n = the number of times that interest is compounded per unit 't'
t = the time the money is invested for, in years
In this case:
P = $1200 (the initial deposit)
r = 3.5% or 0.035 (annual interest rate in decimal)
n = 1 (interest compounded annually)
t = 4 years
Substituting these values into the formula:
A = 1200(1 + 0.035/1)^(1*4)
A = 1200(1 + 0.035)^4
A = 1200(1.035)^4
A ≈ 1200(1.15225)
A ≈ 1382.70
So, the balance in Bob's account at the end of 4 years, rounded to the nearest cent, is approximately $1382.70.
