Sally at age 18 invests $3,000 in the bank account. The account rate goes up 5% annually. How much will be in the account, by the time Sally is 25?
so in 7 years ?
amount = 3000(1.05)^7
= ....
To calculate the amount in the account after 7 years, you need to consider both the initial investment and the annual interest rate.
First, let's calculate the interest earned each year. The interest is 5% of the amount in the account at the end of the previous year.
Step 1: Calculate the interest earned in the first year:
Interest earned = 5% of $3000
Interest earned = 0.05 * $3000 = $150
Step 2: Calculate the total amount in the account after the first year:
Total amount after year 1 = $3000 (initial investment) + $150 (interest) = $3150
Step 3: Repeat steps 1 and 2 for each subsequent year for a total of 7 years:
Year 2:
Interest earned = 5% of $3150
Interest earned = 0.05 * $3150 = $157.50
Total amount after year 2 = $3150 (previous year's total) + $157.50 (interest) = $3307.50
Year 3:
Interest earned = 5% of $3307.50
Interest earned = 0.05 * $3307.50 = $165.375
Total amount after year 3 = $3307.50 (previous year's total) + $165.375 (interest) = $3472.875
Continue this process for years 4 to 7.
Year 4:
Total amount after year 4 = $3651.52
Year 5:
Total amount after year 5 = $3834.08
Year 6:
Total amount after year 6 = $4025.83
Year 7:
Total amount after year 7 = $4226.12
Thus, by the time Sally is 25 years old, there will be approximately $4,226.12 in her bank account.