Problema Solution
The parents of a 12 year old place 3000 in an account earning 4% APR. Recall s=p(1+r)^t
A: if the account compounds annually, how much is in the account when the child turns 18?
B:If the account compounds annually, how much is in the account when the child turns 24?
Answer provided by our tutors
p = $3,000
r = 0.04 or 4%
A: if the account compounds annually, how much is in the account when the child turns 18?
t = 18 - 12 = 6 years
s = 3000(1+0.04)^6
s = $3,795.96
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there are $3,795.96 in the account when the child turn 18.
B:If the account compounds annually, how much is in the account when the child turns 24?
t = 24 - 12 = 12 years
s = 3000(1+0.04)^12
s = $4,803.1
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there are $4,803.1 in the account when the child turns 24.