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Chapter 9: Q26. (page 597)

Shelly’s investment of $3000 has been losing value at a rate of 3% each year. What will her investment be worth in 6 years?

Short Answer

Expert verified

Shelly investment will be worth $2498.92 after 6 years.

Step by step solution

01

Step 1. Write the compound interest equation.

The compound interest equation is given by:

A=P1+rnnt, where A is the amount, P is the principal amount, r is the rate of interest, t is the time.

02

Step 2. Substitute the values. 

Shelly invested $3000 for 6 years into an account with a -3%interest rate compounded annually.

Substitute 3000 for P, -3for r, 1 for n and 6 for t into the formulaA=P1+rnnt.

A=P1+rnn · t=3000×1−0.0311× 6

03

Step 3. Simplify for A.

Simplify the equation for A.

A=P1+rnn · t=3000×1−0.0311× 6=3000×0.976=$2498.92

Thus, Shelly investment will be worth $2498.92 after 6 years.

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