Question

Which equation would we use to figure out this problem? Rachael

started off with $400 in her savings account in 2005. It earns 3% interest
each year. She wants to know how much money she'll have in the account
in 2022.

Answer 1

She'll have $661 in the account in 2022.

Explanation:

Compound interest:

The amount of money earned in compound interest after t years is given by the following equation:

`A(t) = A(0)(1+r)^t`

In which A(0) is the initial amount and r is the interest rate, as a decimal.

Rachael started off with $400. It earns 3% interest each year.

This means that
`A(0) = 400, r = 0.03`

So

`A(t) = A(0)(1+r)^t`

`A(t) = 400(1+0.03)^t`

`A(t) = 400(1.03)^t`

She wants to know how much money she'll have in the account in 2022.

17 years after 2005, which means that this is A(17). So

`A(17) = 400(1.03)^(17) = 661`

She'll have $661 in the account in 2022.