When Nico was born his grandparents put $1000 in a special savings account. The amount of money in the savings account increases by 8% every year. Nico tracks how much money is in the account over time.

Question

After 18 years Nico will have $_ in his saving account

Answer 1

To calculate how much money will be in the savings account after 18 years, we can use the formula for compound interest, which is:

\[ A = P(1 + r)^t \]

Where:

• \( A \) is the amount of money accumulated after \( t \) years, including interest.
• \( P \) is the principal amount (the initial amount of money).
• \( r \) is the annual interest rate (decimal).
• \( t \) is the number of years the money is invested or borrowed.

In this case:

• \( P = 1000 \) (the initial amount)
• \( r = 0.08 \) (8% interest rate)
• \( t = 18 \) (the number of years)

Now, substituting the values into the formula:

\[ A = 1000(1 + 0.08)^{18} \]

Calculating inside the parentheses:

\[ A = 1000(1.08)^{18} \]

Now calculating \( (1.08)^{18} \):

\[ (1.08)^{18} \approx 4.0357 \]

Now multiplying:

\[ A \approx 1000 \times 4.0357 \approx 4035.70 \]

Therefore, after 18 years, Nico will have approximately $4035.70 in his savings account.