Q:

On the day their child was born, her parents deposited $25,000 in a savings account that earns 12% interest annually. how much is in the account the day the child turns 16 years old (rounded to the nearest cent)? hint: an = a1(1 + r)n, r ≠ 1, where a1 is the initial amount deposited and r is the common ratio or interest rate. $136,839.14 $153,259.84 $85,613.50 $448,000.00

Accepted Solution

A:

Value #0 = 25,000 (1 + .12)⁰  =  $25,000
Value #1 = 25,000 (1 + .12)¹
Value #2 = 25,000 (1 + .12)²
Value #3 = 25,000 (1 + .12)³
.
.
.
Value #16 = 25,000 (1 + .12)¹⁶  =  25,000 (6.1304)  =  $153,259.84


I think it was Albert Einstein who was purported to have said that
"Mankind's greatest invention of all time has been compound interest.".