Krystal was given $3000 when she turned 2 years old. Her parents invested it at a 2% interest rate compounded annually. How do you write an expression to determine how much money she had in the account when she turned 18?

1 Answer
anna
May 13, 2018

#$4,118.36#

Explanation:

1) The formula for compound interest:

#A=P(1+(r/n))^(nt)#

2) Substitute:

#A=3000(1+(0.02/1))^(1*16)#

P is principal amount (#$3000#)
r is rate of interest (#2%#)
n is number of times interest is compounded every year (#1#)
t is the number of years (#18-2=16#)

3) Evaluate:

#A=3000(1+0.02)^(1*16)#

#A=3000*1.02^(1*16)#

#A=3000*1.02^16#

#A=3000*1.3727857051#

#A=3000*1.3727857051#

#A=4,118.3571153#

4) Round up to two decimal places because this is money, then add unit:

#$4,118.36#

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