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Given:
Annual interest rate = r%
Growth factor : x = 1 + r
The below function gives the amount in the account after 4 years when the growth factor is x .
To find:
The total amount in the account if the interest rate for the account is 3% each year and initial amount.
Solution:
Rate of interest = 3% = 0.03
Growth factor : x = 1 + 0.03 = 1.03
We have,
Substitute x=1.03 in the given function, to find the total amount in the account if the interest rate for the account is 3% each year.
Therefore, the total amount in the account is 2431.31 if the interest rate for the account is 3% each year.
For initial amount the rate of interest is 0.
Growth factor : x = 1 + 0 = 1
Substitute x=0 in the given function to find the initial amount.
Therefore, 2250 was put into the account at the beginning.