Math help needed: How much will she have in her account #16

Mathematics
Tutor: None Selected Time limit: 1 Day

If a merchant deposits $1,500 annually at the end of each tax year in an IRA account paying interest at the rate of 10%/year compounded annually, how much will she have in her account at the end of 25 years? Round your answer to two decimal places.
A.
B.
C.
D.
Nov 8th, 2015

Thank you for the opportunity to help you with your question!

Compound interest is interest added to the principal of a deposit or loan so that the added interest also earns interest from then on. This addition of interest to the principal is called compounding.

The formula for calculating compound amount is A=P(1+r)^n

Where 

A=?= Accumulated amount

P=$1,500=Principal amount

r=10%=rate of interest

n=25 y=number of years

Now put the value in the formula

A=1500(1+10%)^25

A=1500(10.834)

A=$16252.06


The correct option is A   


Please let me know if you need any clarification. I'm always happy to answer your questions.
Nov 8th, 2015

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