Question

Suppose that your parents invested P50,000 in your account since the time that

you were born, to prepare for your college education. If the average interest rate is 4.4%
compounded annually, (a) give an exponential model for the situation, and (b) will the
money be doubled by the time you turn 18 years old?

Answer 1

9514 1404 393

Answer:

(a) a = 50000(1.044^t)

(b) yes

Explanation:

(a) The compound interest formula tells you the amount of the investment can be modeled by ...

a = P(1 +r)^t

a = 50,000(1.044)^t

__

(b) In 18 years, the amount will be ...

a = 50,000(1.044^18) = 50,000(2.170746)

The multiplier is greater than 2, so the money will be more than doubled in 18 years.