Question

any credit)
1) A couple is opening a savings account for a newborn
baby. They start with $2350 received as gifts from
family and friends. If no deposits or withdrawals are
made, what is the balance of the account if it earns a
simple interest of 3.75% for 18 years?
? Find the interest paid on a $22,000 deposit for six

Answer 1

Answer: $4,365.10

Step-by-step explanation:

Ok, we know that:

The account starts with $2350

There is a simple interest of 3.75% (or 0.035).

Then after one year, the amount in the account will increase by 3.75%, this means that the amount will be:

$2350 + 0.035*$2350 = (1.035)*$2350.

After another year, we have the same increase (but applied to the new amount in the account):

(1.035)*$2350 + 0.035*(1.035)*$2350. = (1.035)^2*$2350

And so on.

You already can see the pattern here, the amount of money in the saving account after N years will be:

M(N) = $2350*(1.035)^N.

Now we can answer:

what is the balance of the account if it earns a  simple interest of 3.75% for 18 years?

Just replace N by 18 in that equation:

M(18) = $2350*(1.035)^18 = $4,365.10