The Hendersons are saving up to go on a family vacation in 2 years. They invest \$3100 into an account with an annual interest rate of 1.13 % compounded annually. Assuming no withdrawals are made, how much money is in the Hendersons' account after 2 years?

Solution

T h e He n d erso n s a re s a v in g u p t o g o o n a f ami l y v a c a t i o n in 2 ye a rs . T h ey in v es t $3100 in t o an a cco u n t w i t h an ann u a l in t eres t r a t e o f 1.13 % co m p o u n d e d ann u a ll y . A ss u min g n o w i t h d r a w a l s a re ma d e, h o w m u c h m o n ey i s in t h e He n d erso n s^{'} a cco u n t a f t er 2 ye a rs ?

Amount : 3170.46

Solution steps

Translate the problem into an equation:

A = 3100 (1 + \frac{0.0113}{1})^{1 \cdot 2}

3100 (1 + \frac{0.0113}{1})^{1 \cdot 2} = 3170.455839

Round to the nearest hundredth:

3170.46

Amount : 3170.46