question is below

Question

When you were born, your Great Aunt Mildred started a college fund in your name! Now that college is in sight for you, it is time to find out how much money is in the account.

Great Aunt Mildred’s original investment was $__75,000___

1. How much money does the account have now if it was... 

a) compounded annually? 

b) compounded quarterly?

c) compounded daily?

Answer 1

For this problem, you need to use the compounding interest formula:

A=P(1+r/n)^^n*t

where,

A = ending amount (solve for this!)

P = starting amount (given 75000)

r = interest rate (4% would be 0.04 for example, use decimal in formula!)

n = # of times compounded per time unit (1 for annually, 4 for quarterly, 365 for daily)

t = time elapsed (use years, this is your age!)

The time elapsed is = your age because the fund was started when you were born and the problem is asking for the value now.

I see the interest rate is not given in the problem, so I cannot provide the exact answers, but use the formula above to solve!