Question

The relative growth rate for a certain type of mutual fund is 15% per year. An account is opened with a balance of $3,000. How much is the mutual fund worth in 5 years? In your final answer, include all of your calculations.

Answer 1

We have been given that an account is opened with a balance of $3,000 and relative growth rate for a certain type of mutual fund is 15% per year.  

In order to tackle this problem we have to find the value of mutual fund after 5 years. For our purpose we will use compound interest formula.

$A=P(1+r)^{t}$ ,where A= amount after t years, P= principal amount, r= interest rate (decimal) and t= number of years.

After substituting our given values in above formula we will get

$A=3000(1+.15)^{5}$

Now we will solve for A

$A=3000(1+.15)^{5}=3000(1.15)^{5}\\ A=3000\cdot (2.011357187)=6034.07$

Therefore, after 5 years mutual fund is worth $6034.07.

Answer 2

Answer:

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Step-by-step explanation:

We have been given that an account is opened with a balance of $3,000 and the relative growth rate for a certain type of mutual fund is 15% per year.  

In order to tackle this problem, we have to find the value of the mutual funds after 5 years. For our purpose, we will use the compound interest formula.

A = P(1+r)^t

After substituting our given values in the above formula we will get:

A = 3000(1+0.15)^5

Now we will solve for A:

A = 3000(1+0.15)^5 = 3000(1.15)^5

A = 3000*(2.011357187) = 6034.07

​Therefore, after 5 years the mutual fund is worth $6034.07.