Question

In 2013 Staci invested $15,500 in a savings account for her newborn son. The account pays 4.4% interest each year. Determine the accrued value of the account in the year 2031, when her son will go to college. Round your answer the nearest cent.

Answer 1

In this problem

we have an exponential growth function of the form

$y=a(1+r)^x$

where

y is the total amount in the saving account

x is the number of years since the year 2013

r is the rate

a is the initial value

where

a=$15,500

r=4.4%=4.4/100=0.044

year 2031 -----> x=2031-2013=18 years

substitute in the equation

$\begin{gathered} y=15,500(1+0.044)^{(18)} \\ y=\ 33,646.56 \end{gathered}$