Question

Sarah's parents started a savings account for her when she was 12. The plan her parents chose earns 3.2% each year, and her parents initial deposit was $3500. How much will be in Sarah's savings account after 3 years when Sarah is ready to look for a car?

Answer 1

$3846.87

Explanation:

Assuming the interest is compounded annually, the value in 3 years is ...

FV = P(1 +r)^t

FV = $3500(1.032^3) ≈ $3846.87

Sarah's account will be worth about $3846.87.