Question

Krystal plans to save $500 at the end of Year 1, $600 at the end of Year 2, and $700 at the end of Year 3. If she earns 2.8 percent on her savings, how much money will she have saved at the end of Year 3?

Answer 1

Answer:

$1,845.192

Explanation:

The computation of the amount saved at the end of year 3 is shown below:

= Amount at the year 1 × (1 + interest rate)^number of years + Amount at the year 1 × (1 + interest rate)^number of years + Amount at the year 1 × (1 + interest rate)^number of years

= $500 × (1 + 0.028)^2 + $600 × (1 + 0.028)^1 + $700  × (1 + 0.028)^0

= 528.392  + $616.80 + $700

= $1,845.192

We simply applied the above formula so that the amount saved for the year 3 could come