Question #e36fd

1 Answer
Mar 30, 2016

Amount of money received by Dusty after n years =125000xx(1+(6.25)/100)^n

Explanation:

Given is the rate of interest 6.25% color (blue)"compounded annually".
Money deposited in the account =$color(red)"125,000"

For compound Interest problems
$1 becomes after 1 year =(1+(color(blue)"Annual % rate of Interest")/100)
After 2 years =(1+("Annual % rate of Interest")/100)^2
After 3 years =(1+("Annual % rate of Interest")/100)^3
..
..
..
After color (magenta)n years =(1+("Annual % rate of Interest")/100)^color(magenta)n

Remember we started with $1 as initial deposit. Therefore, General equation becomes:
Compound amount after n years =color(red)"Initial Deposit"xx(1+("Annual % rate of Interest")/100)^n
Inserting given values

For compounded Interest rate at 6.25% annual, $125,000 becomes after n year
=125000xx(1+(6.25)/100)^n

Amount of money received by Dusty after n years =125000xx(1+(6.25)/100)^n