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2 votes
Burt's grandparents started a savings account for him when he was born. They invested

$1250 in an account that pays 7.5% interest every year. How much money is in the
account on Burt's 18th birthday?

User Entio
by
7.3k points

1 Answer

2 votes

Answer:

4594.76 USD will be in the account on Burt's 18th birthday.

Explanation:

Since interest rate is constant in time, we can use the definition of composite interest to determine how much money will be on Burt's 18th birthday, that is:


C = C_(o)\cdot \left(1+(r)/(100) \right)^(t) (1)

Where:


C_(o) - Initial amount, measured in US dollars.


C - Current amount, measured in US dollars.


r - Annual interest rate, measured in percentage.


t - Time, measured in years.

If we know that
C_(o) = 1250\,USD,
r = 7.5 and
t = 18, then the money in the savings account on Burt's 18th birthday is:


C = (1250\,USD)\cdot \left(1+(7.5)/(100) \right)^(18)


C = 4594.76\,USD

4594.76 USD will be in the account on Burt's 18th birthday.

User CAMason
by
8.3k points
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