Question

Mary who is 13 years old wants to have $8500 to travel to Argentina when she’s 21 years old. She currently has $6439 in savings account earning 4% annual compound interest. How much money will she have an eight years when she wants to travel and will it be enough for her trip?

Answer 1

Answer:

a; she will have $8812

b: It will be enough for her trip

Step-by-step explanation:

In this question, we are tasked with calculating how much a certain value in a savings account that is earning an interest that is compounded annually will be worth.

To calculate this, we use the compound interest formula;

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

Where A is the amount after that number of years which of course we want to calculate

P is the principal amount which is the amount we are investing which is $6439 according to the question

r is the interest rate which is 4% = 4/100 = 0.04

t is the time which is 8 years

n is 1 which is the number of times interest will be compounded annually

We plug these values as follows;

A = 6439(1 + 0.04/1)^8

A = 6439(1.04)^8

A = $8,812.22

This amount is greater then the needed $8,500 for the trip and of course it will be enough