3400 dollars is placed in an account with an annual interest rate of 8.25%. How much will be in the account after 25 years, to the nearest cent?

Answer 1

The basic equation to use is y = ab^x but in this case the x is actually time, so let's use "t" as the variable. So y = ab^t

Also, the a is the initial value (starting point) so in this case, that is 3400. So, y = 3400b^t

The b in this case is given by the interest rate. So convert 8.25% into a decimal (0.0825) but since this is growing by .0825, we actually need to add 1 to that decimal, so b = 1 + 0.0825 = 1.0825. That make the equation: y = 3400(1.0825)^t.

But t = 25 years, so: y = 3400(1.0825)²⁵

Just plug that into your calculator to get the value.