To calculate the amount of money in the account at the end of 4 years with an interest rate of $0.85\%$, compounded annually, we use the compound interest formula:

$A = P \times (1 + r)^t$

Where:

• $A$ = the amount of money accumulated after $t$ years, including interest
• $P$ = the principal amount (initial deposit)
• $r$ = annual interest rate (in decimal form)
• $t$ = time the money is invested for (in years)

Given:

• $P = 1000$
• $r = 0.0085$ (0.85% expressed as a decimal)
• $t = 4$

Substitute the values into the formula:

$A = 1000 \times (1 + 0.0085)^4$

$A = 1000 \times (1.0085)^4$

Now calculate $(1.0085)^4$:

$(1.0085)^4 \approx 1.034458$

$A \approx 1000 \times 1.034458 = 1034.46$

Final Answer:

The amount of money in the account at the end of 4 years will be approximately $1,034.46.

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Would you like a detailed explanation of the steps or further clarifications?

Here are 5 related questions to consider:

1. How would the calculation change if the interest were compounded monthly?
2. What would happen if the interest rate increased to 2%?
3. How long would it take for the account to double at this interest rate?
4. What is the difference in earnings between annual and continuous compounding over 4 years?
5. How would the formula change if withdrawals were made yearly?

Tip: For small percentages, using approximations like simple interest can sometimes provide quick estimates, but compound interest is more accurate for precise calculations.