Question

Larry invests $100 in a savings plan. The plan pays 4 1/2 % interest each year on his $100 account balance.

a. How much money will Larry earn in interest after 3 years? After 5 years?


b. How can you find the balance of Larry’s account at the end of 5 years

Answer 1

a) Write an Equation

f(t) = 100(1.045)^t ** t = time; f(t) = money in savings account

Solve for 3 years

100(1.045)^3 = 100(1.141166125)

Simplify

114.1166125 dollars, which rounds to $114.12

You subtract the original amount of money, to find the interest, and get

$14.12

Solve for 5 years

100(1.045)^5 = 100(1.24618193765)

Simplify

124.618193765 dollars, which rounds to $124.62

You subtract the original amount of money, to find the interest, and get

$24.62

b)

To solve for 5 years:

100(1.045)^5 = 100(1.24618193765)

Simplify

124.618193765 dollars, which rounds to $124.62

**Note: I assumed that this is compounded interest, not simple interest

Answer 2

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