Cassandra bought a dresser for $500. If the value of the dresser increases 6% annually, what will be the value of Cass's dresser at the end of 3 years to the nearest dollar?
500 * 1.06 = 530 >> end of year 1
530 * 1.06 = 561.80 >> end of year 2
?? >>> end of year 3
i mean how much will the dresser cost in 3 years?
Follow the same pattern I showed you to find its value in three years.
where does the 1.06 come from?
where does 1.06 come from
To find the value of Cassandra's dresser at the end of 3 years, we need to calculate the compound interest. Compound interest is calculated using the formula:
A = P(1 + r/n)^(nt)
Where:
A = the final amount (the value of the dresser after 3 years)
P = the principal amount (the initial purchase price of $500)
r = the annual interest rate (6%, which is written as 0.06 when using the formula)
n = the number of times that interest is compounded per year (annually, so n = 1)
t = the number of years (in this case, t = 3)
Now we plug in the values into the formula and calculate the amount:
A = 500(1 + 0.06/1)^(1*3)
= 500(1.06)^3
= 500(1.191016)
= 595.51 (rounded to the nearest dollar)
Therefore, the value of Cassandra's dresser at the end of 3 years, rounded to the nearest dollar, is $596.