Question

17. A baseball trading card is sold for $2, and its

value increases by 8% each year after it is sold.
Find the value of the baseball trading card in 10
years.

Answer 1

$1,065.71

Explanation:

use the compound interest formula: A = P(1 + r/n)^nt where:

P = principal, $2

r = interest rate, 8% = .08

t = term, in years; 10

n = # of times per year compounding occurs; 1

A = 2(1 + .08/10)^10(1)

A = 2(1 + .008)^10

A = 2(1.008)^10

A = 2.008^10

A = 1065.71

Answer 2

$4.32

Explanation:

8% can be represented as 1.08

2 x 1.08 = 2.16

2 x 1.08 x 1.08 = 2.33

2 x 1.08 x 1.08 x 1.08 = 2.52

etc. all the way up to 10