00:01
We've got a problem with compounding interest, meaning we should automatically think of the equation in the book a equals p times 1 plus r over n raised to the nt power.
00:12
With this in mind, let's determine what our variables are for this problem so that we can solve.
00:16
A is going to be our answer, that's the total amount at the end, then p, that's the amount that we put into the account initially.
00:23
While we are told in this problem that we invested $1 ,000.
00:27
So that's going to be p.
00:28
R is the interest rate.
00:30
So we are told that we're paid 4 % interest annually.
00:33
That means 0 .04 in decimal form.
00:37
That is changing a percent to a decimal.
00:38
It's just moving the decimal point over by two spaces to the left...