A deposit of $5,000 is made into a savings account that offers 7.5% annual interest. Which equation models the amount of money in the account after t years?

P(t) = 5,000(1.75)t

P(t) = 5,000(1.075)t

P(t) = 5,000(0.925)t

P(t) = 5,000(0.25)t

Question

A deposit of $5,000 is made into a savings account that offers 7.5% annual interest. Which equation models the amount of money in the account after t years?



P(t) = 5,000(1.75)t

P(t) = 5,000(1.075)t

P(t) = 5,000(0.925)t

P(t) = 5,000(0.25)t

anonymous · Answer

P(t) = A(1 + r)^t
WHERE
A = Amount
r  = decimal rate  IE 80% = .8 so 1+r = 1.8
t  = term in years

the next thing you'll want to know is what about x terms per year, like monthly.

in that case
P=A(1 + r/n)^(nt)

WHERE
n= periods per term

From there you can work out just about any of these problems