Question

A $50,000 investment earns 18% annually. If B represents the balance and t represents the number of years, determine an expression that gives the account balance, B, after t years. Also, determine an equivalent expression that displays the effective monthly interest rate.

Answer 1

usa test prep its B

Explanation:

Answer 2

Using the compound interest formula;
FV=P(1+r/100)^t

FV is the future value
P is the principle
r is the rate
t is the time

the formula that gives the account balance after t years will be:

FV=50000(1+18/100)^t
FV=50000(1.18)^t

The formula for effective monthly interest rate will be:
monthly interest rate=(annual rate)/(number of months)
annual rate=18%
number of months in a year=12 months
rate=18/12=1.5%