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seropon [69]
3 years ago
7

You are saving money for a down payment on a new house. You intend to place $7,500 at the end of each year for three years into

an account earning 5% per year. At the end of the fourth year, you will place $10,000 into this account. How much money will be in the account at the end of the fourth year?
Business
2 answers:
SVETLANKA909090 [29]3 years ago
8 0

Answer:

$37,848.9

Explanation:

We can use the interest rate formula to figure out how much is in the account after the first 3 years. The interest rate formula is show below:

A = P (1 + r)^t

Let me delineate what each part of this equation means:

A = The total amount

P = The initial amount of money put into the account

R = the interest rate

T = Time

The equation gives us the following:

  • You place $7,500 each year for three years
  • The interest rate is 5%
  • At the end of the 4th year $10,000 will be placed in the account

First, let's calculate the P in the equation.

You put $7,500 each year for 3 years, so multiply 7,500 by 3.

(7,500) * (3) = 22,500

Next, let's start putting everything into the equation, like this:

A = 22,500(1 + .05)^3

(When doing interest rate you have to move the decimal over twice)

Now that we have the equation, let's solve it!

A = 22,500(1.05)^3\\A = 22,500(1.15763)\\A = 26,046.6

After 3 years $26,046.6 is in the account.

But, don't forget the last part of the question!

But you have a fourth year too!

Add the $10,000 onto the $26,046.6

That equals $36,046.6.

Lets plug this back into the equation for the final year

A = 36046.6(1.05)^1\\A = 37848.9

Thus, the final answer will be $37,848.9

<em>Hope this helps!</em>

<em>- Kay :)</em>

blondinia [14]3 years ago
5 0

Answer:

you earn  7,510

Explanation:

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