Question

Trever invested $10,000 in an account that earns 8.5%

interest that is compounded monthly.
(a) Write an exponential model for the balance of the
account.
(b) Determine the amount of money in the account
after 15 years.

Answer 1

Results are below.

Explanation:

Giving the following information:

Trever invested $10,000 in an account that earns 8.5% interest that is compounded monthly.

First, we need to calculate the monthly interest rate:

i= 0.085 / 12= 0.00708

Now, to calculate the future value of the investment, we need to use the following formula:

FV= PV*(1+i)^n

PV= initial investment

i= interest rate

n= number of periods

In this case:

FV= 10,000*(1.00708^n)

Finally, for 15 years:

n= 15*12= 180 months

FV= 10,000*(1.00708^180)

FV= $35,605.31