114k views
1 vote
A bank account earns 2.5% interest, compounded annually. You get $1,000 for your 16th birthday and

open a savings account.

•create an equation to model this scenario

•how much money will be in the account in 10 years

User Alex Sed
by
8.4k points

1 Answer

5 votes
The equation to model this scenario is:

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

where:
A = the amount of money in the account after t years
P = the principal amount (initial investment), which is $1,000 in this case
r = the annual interest rate, which is 2.5%
n = the number of times the interest is compounded per year, which is once annually
t = the number of years the money is invested

Substituting the given values into the equation, we get:

A = 1000(1 + 0.025/1)^(1×10)
A = 1000(1.025)^10
A ≈ $1283.64

Therefore, after 10 years, there will be approximately $1,283.64 in the savings account.
User Sumshyftw
by
8.4k points

No related questions found

Welcome to QAmmunity.org, where you can ask questions and receive answers from other members of our community.

9.4m questions

12.2m answers

Categories