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Warm-Up:

f$200 is placed in a savings account that earns 3.5% interest compounded annually, then
how much would the savings account be worth after 12 years?

1 Answer

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Answer:

To calculate the future value of the savings account after 12 years, we can use the formula for compound interest:

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

Where:

A is the future value of the savings account

P is the principal amount (initial deposit)

r is the annual interest rate (expressed as a decimal)

n is the number of times that interest is compounded per year

t is the number of years

In this case, the principal amount (P) is $200, the annual interest rate (r) is 3.5% (or 0.035 as a decimal), and interest is compounded annually (n = 1). We need to calculate the future value (A) after 12 years (t = 12).

Plugging in these values into the formula, we get:

A = $200(1 + 0.035/1)^(1*12)

A = $200(1 + 0.035)^12

A = $200(1.035)^12

A ≈ $200(1.485947)

A ≈ $297.19

Therefore, the savings account would be worth approximately $297.19 after 12 years.

Explanation:

User Hassan Jawed
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