Question
Asked Dec 12, 2019
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Section 2.2 (85)

In August 2013, E*TRADE Financial was offering only 0.05% interest on its online checking accounts, with interest reinvested monthly. Find the associated exponential model for the value of a $5000 deposit after "t" years. Assuming that this rate of return continued for 7 years, how much would a deposit of $5000 in August 2013 be worth in August 2020? (Answer to the nearest $1 .)

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Expert Answer

Step 1

Step 2

Also, it is given that the interest is compounded monthly. As there are 12 months in a years, n = 12. The required exponential model is evaluated as follows.

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nt A = P 1+ in 12r 0.0005 A(t) = 5000 1+- 12

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Step 3

Since the rate of return is continued for 7 years, substitu...

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12(7) 0.0005 A(7) = 5000 1+ 12 = 5017.53

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Advanced Math