Algebra with applications

Question

A principle of $2400 is invested at 7.5% interest, compounded annually. How much will the investment be worth after 15 years?

Answer 1

For problems such as this, we will use an exponential growth equation:

A = p(r)^t

 

where A = amount of money after t years, p = principal amount of money, r = rate of growth (interest plus 1), and t is the number of years.

For this problem, we have the following:

p = 2400

r = 0.075 + 1 = 1.075

t = 15

Now we substitute everything in and solve for A:

A = 2400(1.075)¹⁵= 7101.31

You will have $7101.31 in your account after 15 years.