a bank is advertising that new customers can open a saving account with a 3.75 % interest rate compounded annually. Robert invest $5000 in an account at this rate. If he makes no additional deposits or withdrawals on his account, find the amount of money he will have after three years

Question

a bank is advertising that new customers can open a saving account with a 3.75 % interest rate compounded annually.  Robert invest $5000 in an account at this rate.  If he makes no additional deposits or withdrawals on his account, find the amount of money he will have after three years

owlfred · Answer

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anonymous · Answer

A 3.75% annual interest rate means that every year his money will increase by 3.75% of what it was the year before. The amount of money he has in the bank over a span of years can therefore be modeled by the following exponential function:
amount of money after t years = $5,000 * (number of years) ^ 1.0375
(3.75% represented as a decimal is 0.0375)

anonymous · Answer

should say amount of money after t years = $5,000 * (number of years) ^ 1.0375t