anonymous
  • anonymous
Every month Jon saves $350.00. If he earns 2.5% interest on this amount, how much will he have saved in a year? A. $1,050.00 B. $2,795.00 C. $4,200.00 D. $4,305.00
Mathematics
  • Stacey Warren - Expert brainly.com
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SOLVED
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schrodinger
  • schrodinger
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anonymous
  • anonymous
@jim_thompson5910
jdoe0001
  • jdoe0001
I'm assuming they're saying, that in every month he earns 2.5% so he really deposits in the bank $350 PLUS 2.5% of $350 that is 350 + 350(0.025) every month so in a year, well there are 12 months in a year, so 12 times that much
anonymous
  • anonymous
okay I got D!

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More answers

jdoe0001
  • jdoe0001
yeah, I got the same :)
wolf1728
  • wolf1728
I think it might be referring to a monthly annuity. The formula for which is attached,
1 Attachment
anonymous
  • anonymous
im confused now.. so are you saying you may think jdoes anser is wrong?
wolf1728
  • wolf1728
I'm just saying maybe. I'm not sure. It's just that the problem seems as if it is referring to an annuity.
anonymous
  • anonymous
@amistre64 would you say D is correct?
amistre64
  • amistre64
it is an annuity
amistre64
  • amistre64
and unless stated otherwise, the interest rate is given as an annual rate and would have to be modified by /12 ... for 12 periods
amistre64
  • amistre64
350(1+.025/12)^12 + 350(1-(1+.025)^(12))/(1-(1.025/12))
amistre64
  • amistre64
... one of my typos abounds im sure
jdoe0001
  • jdoe0001
hehe
anonymous
  • anonymous
im so confused here lol
amistre64
  • amistre64
350(1+.025/12)^12 + 350(1-(1+.025/12)^(12))/(1-(1+.025/12)) thats better :)
amistre64
  • amistre64
I get 4607, and since the rate is so low to start with ... im assuming D is correct regardless
anonymous
  • anonymous
4607.31173314
wolf1728
  • wolf1728
Now that I notice, the multiple choice answers are even amounts and an annuity is not something that would calculate to an even amount.
amistre64
  • amistre64
multiple choice options tend to round :)
wolf1728
  • wolf1728
Okay, as I said it sure sounds like an annuity to me.
amistre64
  • amistre64
Mo = 350 M1 = 350(1+.025/12) + 350 M2 = 350(1+.025/12)^2 + 350(1+.025/12) + 350 M3 = 350(1+.025/12)^3 +350(1+.025/12)^2 + 350(1+.025/12) + 350 letting k clean this up we get a geometric sum Mn = 350 + 350k + 350k^2 + ... + 350k^n
amistre64
  • amistre64
1+k+...+k^n -k-...-k^n - k^(n+1) -------------------- [1-k^(n+1)]/(1-k)
wolf1728
  • wolf1728
I get 4,257.31 from a calculator located here: http://www.coolmath.com/calculators/calculator-annuity-1.html
amistre64
  • amistre64
350(1-k^(13))/(1-k), k=1+.025/12 http://www.wolframalpha.com/input/?i=350%281-k%5E%2813%29%29%2F%281-k%29%2C+k%3D1%2B.025%2F12 4607 still :)
amistre64
  • amistre64
even at best ... 350 for 12 months is 4200, so with interest it has to be greater than that
wolf1728
  • wolf1728
Well Kaitlin, I'm sorry about bringing up the concept of an annuity but it's something to consider if your teacher mentions it.
anonymous
  • anonymous
dont be confused. you will receive different answers for compounding using daily, weekly, monthly, semiannual, and annually. it all depends on how it is compounded. you may want to check with your teacher. the general rule when none is given is to compound annually.

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