Question

Suppose you deposit $1500 in a savings account that pays interest at an annual rate of

6%. No money is added or withdrawn from the account.
a. How much will be in the account after 5 years?
b. How much will be in the account after 20 years?
c. How many years will it take for the account to contain $2500?
d. How many years will it take for the account to contain $4000?

Answer 1

a.) $1950

b.) $3300

c.) 12 years (a little over 11 years)

d.) 28 years(rounded up from 27.77... years)

Explanation:

1500 is already in the account

6% of 1500 = 90

.06 * 1500 = 90

a.) 90 * 5 = 450 + 1500 = 1950

b.) 90 * 20 = 1800 + 1500 = 3300

c.) 2500 - 1500 = 1000 / 90 = 11.11...

d.) 4000 - 1500 = 2500 / 90 = 27.77...