tamika opened a money market account that has a 4.25% annual interest rate, compounded annually. She deposits $1750 into the account each year. How much interest will the account earn after 15 years?
To answer this question you will need to be able to calculate compound interest. The following formula can be used to do this:
A = P(1 + r/n)^nt
A stands for the amount you will have after a period of time. P stands for the Principal; $1750 in this case r/n stands for the rate over the number of times the interested is compounded per year (in your case, it will be 0.0425/1) ^nt stands for "to the power of" the number of years you will be compounding the interest. In this case it is 15
Let's put it all together: A = 1750 (1+0.0425/1)^15 A = $3267.22 is approximately the new amount after 15 years
