Finn deposited $3,500 in a new account at his bank.
The bank pays 5.5% interest compounded annually on this account.
Finn makes no additional deposits or withdrawals.
Which amount is closest to the balance of the account at the end of 3 years?
Responses
A $4,109.84$4,109.84
B $192.50$192.50
C $577.50$577.50
D $609.84
To calculate the balance of the account at the end of 3 years, we can use the formula for compound interest:
A = P(1 + r/n)^(nt)
Where:
A = the final account balance
P = the initial deposit
r = the interest rate (in decimal form)
n = the number of times interest is compounded per year
t = the number of years
Plugging in the given values:
P = $3,500
r = 5.5% = 0.055
n = 1 (compounded annually)
t = 3 years
A = 3500(1 + 0.055/1)^(1*3)
A = 3500(1.055)^3
A ≈ 3500(1.17155)
A ≈ $4,100.43
The closest amount to the balance of the account at the end of 3 years is $4,109.84 (Option A).
An investor puts $4,500 into a life insurance policy that pays 8.0% simple annual interest. If no additional investment is made into the policy, how much accumulated interest should the investor expect at the end of 8 years?
To calculate the accumulated interest, we can use the formula:
I = P * r * t
Where:
I = accumulated interest
P = initial investment
r = interest rate (in decimal form)
t = number of years
Plugging in the given values:
P = $4,500
r = 8.0% = 0.08
t = 8 years
I = 4500 * 0.08 * 8
I = $2,880
The investor should expect $2,880 of accumulated interest at the end of 8 years.
Tuition for one year at the community college Sean would like to attend is about $8,880. Sean plans to save money each month for the next 2 years to help pay for his first year. If his parents plan to contribute $6,000 toward his first year, what is the minimum about Sean must save each month to have enough money to pay for his first year of tuition?
Responses
A $60$60
B $80$80
C $120$120
D $240$240
To calculate the minimum amount Sean must save each month, we need to subtract his parents' contribution from the total tuition amount and then divide by the number of months he has to save.
Total tuition cost - Parents' contribution = Sean's savings goal
$8,880 - $6,000 = $2,880 (Sean's savings goal)
Next, we divide Sean's savings goal by the number of months he has to save:
$2,880 / (2 years * 12 months/year) = $120
Therefore, the minimum amount Sean must save each month to pay for his first year of tuition is $120 (Option C).