Question

Tom opens a bank account and makes an initial deposit of $500. The banker tells Tom that he is going to revive an annual rate of 6% on his investment. Find the bank balance assuming Tom leaves the account untouched for 15 years.

Answer 1

Tom will have $1,198.28 in 15 years

Explanation:

A(t) = P(1 + r/n)^nt

A(15) = 500(1 + 0.06/1)^1(15)

A(15) = 500(1.06)^15

A(15) = 500(2.3965581931)

A(15) = 1198.27909655

A(15) = 1198.28

Answer 2

Revive? Ah, receive.

6% interest compounded annually.

Each year Tom's money gets multiplied by 1.06.

So after 15 years, Tom has

`500 * 1.06^(15) = \$1198.28`