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

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