Question

Mary wants to have $8500 to travel to South America when she is 21. She currently has $6439 in a savings account earning 4% annual compound interest. Mary is 13 now. If Mary does not take out or deposit any money, how much money will Mary have when she is 15?

Answer 1

The answer: $6964.42

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Answer 2

Answer: she would have $6964.4 when she is 15 years.

Step-by-step explanation:

We would apply the formula for determining compound interest which is expressed as

A = P(1+r/n)^nt

Where

A = total amount in the account at the end of t years

r represents the interest rate.

n represents the periodic interval at which it was compounded.

P represents the principal or initial amount deposited

From the information given,

P = $6439

r = 4% = 4/100 = 0.04

n = 1 because it was compounded once in a year.

t = 15 - 13 = 2 years

Therefore,.

A = 6439(1 + 0.04/1)^1 × 2

A = 6439(1.04)^2

A = $6964.4