Question

Allison was left an inheritance from her great aunt . However, she is not able to touch it until she is 21 years old. Allison is 12 years old now, and inherited $50,000 that was put into an account that earns 2% interest. How much interest will Allison have earned when she turns 21 year old? If she decides to withdraw all of the money on her 21st birthday, how much money will she have? Work it out.

Answer 1

Simple interest : A=P(1+rt) A = Acrued, P= Principal amount r = rate t= time

P = 50,000
r = 2% or 0.02
t = 21-12 = 9 yrs
A = $ 50,000(1+ (0.02 x 9)
A = $ 50,000 x 1.18
A = $ 59,000

Answer 2

Add 50,000 9 times and see what you get!