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#
