Question

Jonathan puts his life savings of $490 in a savings account that has an interest rate of 2.5% per year. If he does not take any money out over the next 7 years, how much will be in his account? Round to the nearest whole dollar.

Answer 1

568$

Explanation:

a1(b)^n-1

First multiply the initial value (490) into 1.025 (Because it is growing so we add 1 to the rate converted into a decimal.) then n-1 or 7-1 which is 6, simply solve.

Its hard to explain so you should have an equation set up like this:

f(x)=490(1.025)^7-1

that is 568.249 (568)

Hope it helps.