Question

(PLEASE HELP)

emma's mother started a college fund of emma's 3rd birthday. She deposited $4,500 into an investment account that yields an interest rate of 7.5% compounded annually. If no additional deposits or withdrawals are made, how much will this investment account be worth when emma turns 18 years old?

Answer 1

The interest is $1350 and the amount is $5850.

Explanation:

STEP 1: Find an interest by using the formula I = P*I*T, where I is interest, P is total principal, i is rate of interest per year, and t is total time in years.

In this example P = $4500, i = 7.5% and t = 4 years, so

4500*0.075*4

I = 1350

STEP 2: Find an amount by using the formula .

Since P = $4500 and I = $1350 we have

$4500 + $1350 = $5850