After investing $370 at an interest rate of 4% compounded annually for two years, how much will Paula have?

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Multiple Choice

After investing $370 at an interest rate of 4% compounded annually for two years, how much will Paula have?

Explanation:
To determine the amount Paula will have after investing $370 at an interest rate of 4% compounded annually for two years, we can apply the formula for compound interest: \( A = P(1 + r)^n \) where: - \( A \) is the amount of money accumulated after n years, including interest. - \( P \) is the principal amount (the initial amount of money). - \( r \) is the annual interest rate (decimal). - \( n \) is the number of years the money is invested or borrowed. In this situation: - The principal \( P \) is $370. - The annual interest rate \( r \) is 4%, which is 0.04 in decimal form. - The number of years \( n \) is 2. Plugging in these values, we calculate: \( A = 370(1 + 0.04)^2 \) First, calculate \( (1 + 0.04) \): \( 1 + 0.04 = 1.04 \) Next, raise this to the power of 2: \( (1.04)^2 = 1.0816 \) Now, multiply that by the principal

To determine the amount Paula will have after investing $370 at an interest rate of 4% compounded annually for two years, we can apply the formula for compound interest:

( A = P(1 + r)^n )

where:

  • ( A ) is the amount of money accumulated after n years, including interest.

  • ( P ) is the principal amount (the initial amount of money).

  • ( r ) is the annual interest rate (decimal).

  • ( n ) is the number of years the money is invested or borrowed.

In this situation:

  • The principal ( P ) is $370.

  • The annual interest rate ( r ) is 4%, which is 0.04 in decimal form.

  • The number of years ( n ) is 2.

Plugging in these values, we calculate:

( A = 370(1 + 0.04)^2 )

First, calculate ( (1 + 0.04) ):

( 1 + 0.04 = 1.04 )

Next, raise this to the power of 2:

( (1.04)^2 = 1.0816 )

Now, multiply that by the principal

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