Question

Tom opens a bank account and makes an initial deposit of $500. The banker tells Tom that he is going to receive an annual rate of 6% on his investment. Find the bank balance assuming Tom leaves the account untouched for 15 years.

Answer 1

Answer: $ 1198.28 (approx)

Step-by-step explanation:

Here, the principal amount, P = $ 500

Annual rate of interest, r = 6%

Time, t = 15 years

Thus, the amount in the account, when the initial amount is compounded with the rate of 6% for 15 years,

$A=P(1+\frac{r}{100})^{15}$

$A=500(1+\frac{6}{100})^{15}$

$=500(1+0.06)^{15}$

$=500(1.06)^{15}$

$=500\times 2.3965581931$

$=1198.27909655\approx 1198.28$

Hence, the balance after 15 years in the account = $ 1198.28 (approx)

Answer 2

A=P(1+r)^t
P=500
r=0.06
t=15
Thus A=500(1.06)^15=1198,279