A customer deposits $500 in an account that pays 4% annual interest. What is the balance after 3 years if the interest is compounded annually?

Compound interest formula: V(t) =P(1+r/n)^nt

t = years since initial deposit
n= number of times compounded per year
r= annual interest rate (as a decimal)
P= initial (principa) investment
V(t) = value of investment after t years

The value of the investment V(t) after t years is $562.43

Step-by-step explanation:

Here, we are interested in calculating the balance V(t) after 3 years given the information in the question.

We are to use the given formula.

From the question;

V(t) = ?

P= $500

t = 3 years

r = 4% = 4/100 = 0.04

n = 1

Substituting these values into the formula, we have ;

V(t) = 500( 1 + 0.04/1)^(3)

V(t) = 500(1.04)^3

V(t) = 562.432