Question

Alexander invested $320 in an account paying an interest rate of 1. 5% compounded annually. Assuming no deposits or withdrawals are made, how much money, to the nearest hundred dollars, would be in the account after 18 years?.

Answer 1

After using the compound interest formula, it's calculated that Alexander will have approximately $414.94, which rounds to $400 when rounded to the nearest hundred dollars after 18 years.

Step-by-step explanation:

Alexander is interested in finding out the future value of his investment using the compound interest formula. The compound interest formula is A = P(1 + r/n)^(nt), where:

• P is the principal amount (the initial amount of money)
• r is the annual interest rate (in decimal)
• n is the number of times that interest is compounded per year
• t is the time the money is invested for, in years
• A is the amount of money accumulated after n years, including interest.

In this case, P is $320, r is 1.5% or 0.015, n is 1 (since the interest is compounded annually), and t is 18 years. Plugging these values into the compound interest formula gives us:

A = 320(1 + 0.015/1)^(1*18)

A = 320(1.015)^18

Using a calculator, we find that:

A ≈ 320(1.297)

A ≈ $414.94

Rounded to the nearest hundred dollars, the amount in the account after 18 years will be approximately $400.