4.1 Modeling Accumulations: Quiz


Problem 4

Money accumulates in an interest-earning bank account according to the formula

Balance = B0(1 + i)t

where B0 is the beginning balance in the account, i is the periodic interest rate, and t is the number of periods that have passed.

If the begining balance in the account is $125, and the account earns 3% interest per year, compounded daily, what will be the balance after 1 year? After 50 years? When does the balance reach $500?


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