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5 June, 06:59

Clarence won $175,000 playing jeopardy and placed into an account that earns 7.25% interest compounded annually. Write an equation for the amount of money in his account after x years how much money will he have in his account after 20 years?

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  1. 5 June, 07:19
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    Step-by-step explanation:

    Initial amount that Clarence deposited into the account is $175,000 This means that the principal,

    P = 175000

    It was compounded annually. This means that it was compounded once in a year. So

    n = 1

    The rate at which the principal was compounded is 7.25%. So

    r = 7.25/100 = 0.0725

    It was compounded for x years. So

    t = x

    The formula for compound interest is

    A = P (1+r/n) ^nt

    A = total amount in the account at the end of x years. Therefore

    A = 175000 (1+0.0725/1) ^1*x

    A = 175000 (1.0725) ^x

    The amount of money that he will have in his account after 20 years would be

    A = 175000 (1.0725) ^20

    A = $709552
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