Question

On the day their child was born, her parents deposited $15,000 in a savings account that earns 10% interest annually. How much is in the account the day the child turns 16 years old (rounded to the nearest cent)?
Hint: an = a1(1 + r)n, r ≠ 1, where a1 is the initial amount deposited and r is the common ratio or interest rate.
$68,924.59
$70,031.50
$264,000.00
$62,658.72

Answer 1

The question can be solved using formula an = a1(1 + r)^n where n is the number of year, r is the interest rate and a is the initial amount. The value of  the variable would be:
a= initial amount = $15,000
r= interest= 10%= 0.1
n= number of year = 16

The calculation would be:
an = a1(1 + r)n
a16 = $15,000(1 + 0.1)^16
a16 = $15,000(1 .1)^16
a16 = $15,000(4.59497)
a16= $68,924.59