Question

Jenna saves $2,500 per year in an account that earns 10% interest per year, compounded annually. Jenna will have ______ saved in 30 years. Her account balance is a result of Jenna’s ______.

Answer 1

Jenna will have $411,235 saved in 30 years due to her consistent savings of $2,500 per year and the power of compound interest at a rate of 10% compounded annually.

Step-by-step explanation:

The question involves calculating the future value of a series of annual savings using the concept of compound interest. Jenna saves $2,500 per year at an annual interest rate of 10%, compounded annually. To calculate the total amount saved in 30 years, we can use the formula for the future value of an annuity:

FV = P × ` (((1 + r)^n - 1) / r)`

Where:

• FV is the future value of the annuity.
• P is the annual payment ($2,500).
• r is the annual interest rate (10% or 0.10).
• n is the number of years the money is invested (30).

Plugging in the values:

FV = $2,500 × (((1 + 0.10)^30 - 1) / 0.10)

FV = $2,500 × (((1.10)^30 - 1) / 0.10)

FV = $2,500 × (17.4494 - 1) / 0.10

FV = $2,500 × 164.494

FV = $411,235

Jenna will have $411,235 saved in 30 years. Her account balance is a result of Jenna's consistent savings and the power of compound interest.