Question

Tom opens a bank account and makes an initial deposit of $500. The banker tells Tom that he is going to revive an annual rate of 6% on his investment. Find the bank balance assuming Tom leaves the account untouched for 15 years.

Answer 1

Tom will have $1,198.28 in 15 years

Explanation:

A(t) = P(1 + r/n)^nt

A(15) = 500(1 + 0.06/1)^1(15)

A(15) = 500(1.06)^15

A(15) = 500(2.3965581931)

A(15) = 1198.27909655

A(15) = 1198.28

Answer 2

So for this you will be using an exponential equation, which is
`y=ab^x` with a=initial value, b=growth/decay, y = total balance, and x = # of years

In this case, a = 500, and since with this problem the initial value is growing, you will add 100% to 6% to get 106%, or 1.06. The equation will be formed as such:
`y=500(1.06)^x`

With this problem, just plug in 15 into x and solve for y:
`y=500(1.06)^(15)\\ y=1198.28`

In short, after 15 years Tom will have $1198.28 in his account.