Question

note: please make sure to properly format your answers. all dollar figures in the answers need to include the dollar sign and any amount over 1,000 should include the comma ($2,354.67). all percentage values in the answers need to include a percentage sign (%). for all items without specific rounding instructions, round your answers to two decimal places, show both decimal places (5.06). a couple is opening a savings account for a newborn baby. they start with $3,450 received in baby gifts. if no deposits or withdrawals are made, what is the balance of the account if it earns simple interest at 5% for 18 years?

Explanation:

Step1: Identify the simple - interest formula

The simple - interest formula is $I = Prt$, where $P$ is the principal amount, $r$ is the annual interest rate (in decimal form), and $t$ is the time in years. The final amount $A$ in the account is $A=P + I=P(1 + rt)$.

Step2: Convert the percentage to decimal

The annual interest rate $r = 5\%=0.05$, the principal amount $P=\$3450$, and the time $t = 18$ years.

Step3: Calculate the final amount

Substitute the values into the formula $A = P(1+rt)$.
\[

$$\begin{align*} A&=3450\times(1 + 0.05\times18)\\ &=3450\times(1+0.9)\\ &=3450\times1.9\\ & = 6555 \end{align*}$$

\]

Answer:

$\$6,555.00$