Question

Mr. sanchez invested $5000 in a college fund for his daughter. the college fund earns interest at an annual rate of 5%, compounded monthly. approximately how much money will be in the fund in 15 years, if mr. sanchez does not make any deposits or withdrawals?

a. $5,203.71
b. $5,321.78
c. $10,394.64
d. $10,568.52

Answer 1

The correct answer is Option D. To calculate the amount of money in the college fund after 15 years, we can use the formula for compound interest: A = P(1+r/n)^(nt). By plugging in the values, we can calculate that the approximate amount of money in the fund after 15 years is $10,568.52.

Step-by-step explanation:

To calculate the amount of money in the college fund after 15 years, we can use the formula for compound interest:

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

Where:

• A = the final amount in the fund
• P = the initial investment ($5000)
• r = annual interest rate (5% or 0.05)
• n = number of times interest is compounded per year (12 for monthly compounding)
• t = number of years (15)

By plugging in the values, we can calculate:

A = 5000(1+0.05/12)^(12*15) ≈ $10,568.52

Therefore, the approximate amount of money in the fund after 15 years is $10,568.52.