Answer:
[tex]a_n=700(1.05)^{n-1}[/tex]
The balance would be $ 810.3375
Step-by-step explanation:
Given,
The principal amount = $ 700,
Which is increasing with the compound rate of 5 %,
That is, every year the amount would be 105 % or 1.05 times of the previous amount,
Thus, we obtained a GP that can represents the given situation having first term, a = 700,
Common ratio, r = 1.05,
Since, the explicit formula of a GP is,
[tex]a_n=ar^{n-1}[/tex]
[tex]\implies a_n=700(1.05)^{n-1}[/tex]
For the beginning of 4 year, n = 3,
Thus, the balance at the beginning of 4 years would be,
[tex]a_{4}=700(1.05)^3=\$810.3375[/tex]
