Question

Mark has invested $300 at age 16 into a money market account earning 6%. How many times will Mark's investment double before age 52? What will his investment be worth? What would Mark's investment be if he had invested at age 28?

Answer 1

A.3times

B.$1214.68

Explanation

A

Using compound interest formula

A=P(1+I)^n

A is the amount

P is the principal=$300

I is the interest=0.06

n is the time ( between 52 and 16years)=36years

A=300(1+0.06)^36

A=$2444.175

Which means 300 would have become

$2444.175 which is 8 folds.

That means it would have doubled 3times(2×2×2) at age of 52.

B. The time would change to (52-28)=24

Using compound interest formula

A=300(1+0.06)^24

A=$1214.68

Therefore his investment would have been $1214.68.