PRE CALC AB - Kale invested $1,500 in an account with an interest rate of 6.5%.

Question

Kale invested $1,500 in an account with an interest rate of 6.5%. 

 

a) Write an exponential equation to find the account balance in t years if the interest is compounded monthly?

 

b) What will be the account balance in 20 years (assume no other deposits or withdrawals are made).

Answer 1

Given: $1,500 invested at 6.5%

Find:

(a) Exponential equation for account balance if interest is compounded monthly.

(b) Account balance in 20 years.

Solution:

n = years

An = Account balance nth year

An = 15000( 1 + .065/12 )^12*n

A20 = 15000( 1 + .065/12 )^12*(20)

A20 = 15000( 1.0054 )^240

A20 = 54847

After 20 years, the account balance will be $54,847