How much would Babette have accumulated after 15 years?
Babette spends $225 a year on lottery tickets. After 15 years, her total winnings are $1200. Suppose Babette had invested the money she spends on lottery tickets in an account that earns 6% per year compounded annually.
#A={R[(1+i)^n-1]}/i#
Babette spends $225 a year on lottery tickets. After 15 years, her total winnings are $1200. Suppose Babette had invested the money she spends on lottery tickets in an account that earns 6% per year compounded annually.
2 Answers
I would use the compound interest formula to find the amount of money she earns after 15 years of investing an original amount of $225.
Explanation:
I'm not sure what the variables are for the formula you provided are, so I will go ahead and use a different compound interest formula.
A is the amount earned after investing
P is the principal amount invested
R is the rate of interest
N is the number of times a year the principal is compounded
T is the time in years
Since the original amount (before any interest) is $225, the P would be 225. The rate of interest is 6%, or 0.06. The number of times a year the principal is compounded is 1 because the problem says compounded annually/yearly. The time in years is 15.
Solve by PEMDAS:
The final answer should be around $539.33
After 15 years Babette would have accumulated
Explanation:
To solve this problem we use the formula which you have given. The purpose of the formula is to find the future value of an annuity (which is a regular payment into an account with compounding interest)
Given your formula;
Inputing all of this information into the formula yields;
I hope this helps :)
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Check it out :)