Question

Trent has a rich uncle who wishes to give Trent $2,000 on his 17th birthday. Trent is

smart with his money and decides to put it into a savings account that pays 7.5%
interest compounded annually.
a. Write a function to model this situation.
b. How much will Trent's investment be worth when he turns 25 years old? Round to
the nearest penny.

Answer 1

Answer: a) Equation (Xn = 2000 * ( 1 + 7.5/100 ) ^n)

b) 3566.95 dollar ( Approx )

Explanation:

a) Principal amount = 2,000 dollar

Interest rate = 7.5%

Let say Amount that we will get after 1 year be X1

X1 = Principal Amount + 7.5% of principal amount

Amount that we get after 2 years be X2

X2 = X1 + 7.5% of X1

going on this way let Xn be the amount that we get after n years

so, Xn = 2000 * ( 1 + 7.5/100 ) ^n

This is the required equation.

b) After 8 years trent will turn 25

hence using the above formula we can find out amount of money that trent will get after 8 years.

X8 = 2000 * ( 1 + 7.5/100) ^ 8

= 2000 * ( 1.075) ^ 8

= 2000 * 1.7834778256

= 3566.95 dollar ( Approx )