MAT-144 · Mathematical Reasoning Topic 03 · Savings
Topic 03 · Review · Q4

Finding the future value and interest for an investment earning compound interest

Standard compound interest, annual compounding. Round final answers to the nearest cent — and don't round intermediate computations.

01 Worked Example Video

Every step of Finding the future value and interest for an investment earning compound interest explained on video. Pause anywhere; the embed scrolls independently of the page.

YOUTUBE
02 What This Looks Like on ALEKS

ALEKS randomizes the numbers each attempt, but the question shape stays the same. Here are three example versions you might see.

David's CD

David received a $2,100 bonus. He invests it in a 2-year CD at 1.15% compounded annually.

How much money is in David’s account after 2 years? Type just the number.

Do not round intermediate computations; round the final answer to the nearest cent.

A = $
Maria's CD

Maria invests a $5,000 bonus in a 3-year CD at 2.4% compounded annually.

How much money is in Maria’s account after 3 years? Type just the number.

Do not round intermediate computations; round the final answer to the nearest cent.

A = $
Jamal's CD

Jamal invests an $1,800 bonus in a 4-year CD at 1.8% compounded annually.

How much money is in Jamal’s account after 4 years? Type just the number.

Do not round intermediate computations; round the final answer to the nearest cent.

A = $
Heads up: Your ALEKS version will use different numbers. The numbers in the practice below are different too — that way you're exercising the move, not memorizing one answer.
03 The Rule
A = P(1 + r/n)nt P is principal, r is annual rate, n is periods/year, t is years
Annual compounding → n = 1 formula collapses to A = P(1 + r)t
When n = 1 there’s no fraction inside the parenthesis. Compute (1 + r), raise to the t-th power (carry lots of decimals), then multiply by P. Round only at the final answer.
Common slips
(1) Rounded too early. Truncating (1.0115)² from 1.02313225 to 1.0231 costs about seven cents on a $2,100 principal. Carry the full decimal. (2) Used r = 1.15 instead of 0.0115. 1.15% shifts two places, not one. (3) Confused A with I. A is the full balance; I = A − P.
04 Practice — Step by Step
Practice this problem step by step
Invest $2,000 in a 5-year CD at 4% compounded annually. What’s the balance after 5 years?
Step 1

Convert the rate

Write 4% as a decimal.
r =
Step 2

Compute (1 + r) to the t-th power

Compute (1.04)5 and carry at least 5 decimal places.
(1.04)⁵ ≈
Step 3

Multiply by P

Compute 2,000 × 1.2166529. Round to the nearest cent.
A = $
Q3 Q5
MAT-144 · TOPIC 03 · REVIEW · Q4 OF 06