Question

Janet saves $3,000 a year at an interest rate of 4.2 percent. What will her savings be worth at the end of 35 years?

A. $229,317.82
B. $230,702.57
C. $230,040.06
D. $234,868.92
E. $236,063.66

Answer 1

Janet's savings will be worth $B. 230,702.57 at the end of 35 years with an interest rate of 4.2 percent.

Step-by-step explanation:

To calculate the worth of Janet's savings after 35 years with an interest rate of 4.2 percent, we can use the formula for compound interest.

The formula for compound interest is:

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

Where:

A = the future value of the investment/loan, including interest

P = the principal investment amount (the initial deposit)

r = annual interest rate (as a decimal)

n = number of times that interest is compounded per year

t = number of years the money is invested/borrowed for

In this case, Janet saves $3,000 a year, so P = $3,000.

The interest rate is 4.2%, so r = 0.042. The investment is made annually, so n = 1. And she saves for 35 years, so t = 35.

Plugging these values into the formula, we get:

`A = 3000(1 + 0.042/1)^(1*35)`

A = $230,702.57