Question

You save $500 in a retirement account at age 25. it increases an average of 10% per year until you are 65. which formula and result indicates how much money you will have in this account at age 65?

a.500 x (1 + 0.10) ^ (65 - 25) = $22,629.63
b.500 x (1 + (0.10 x (65 - 25)) = $2,500 submit

Answer 1

Answer: The correct answer is Choice A.

This is an exponential equation in the form of y = ab^x. The a value is the start, b is the rate and x is the number of years.

Therefore, our equation should be:

y = 500(1.10)^40

Choice A is a version of this equation.