ShmoopTube

Where Monty Python meets your 10th grade teacher.

Search Thousands of Shmoop Videos


Numbers and Operations Videos 64 videos

SAT Math 3.2 Numbers and Operations
1262 Views

SAT Math 3.2 Numbers and Operations

SAT Math 1.4 Numbers and Operations
211 Views

SAT Math 1.4 Numbers and Operations. Solve the equation.

SAT Math 1.1 Numbers and Operations
280 Views

SAT Math 1.1 Numbers and Operations. How many combinations of beverage and cereal can be made?

See All

SAT Math 2.3 Numbers and Operations 194 Views


Share It!


Description:

SAT Math 2.3 Numbers and Operations. If Joaquin invests $500, how much will the investment be worth after 3 years?


Transcript

00:02

Here’s your shmoop du jour, brought to you by compounding interest.

00:07

Sort of like… your level of interest in this video.

00:11

A certain investment pays 8% interest compounded annually.

00:16

If Joaquin invests $500, how much will the investment be worth after 3 years?

00:22

And here are your potential answers...

00:29

We’re so glad we talked Joaquin out of investing his money in that magic bean business he was so hot on.

00:34

So he makes 8% interest on his investment each year…

00:38

…which means that, at the end of each year, he has 108% of the amount he had a year earlier.

00:44

There are two ways we can go from here. We can grind it out and just manually take 108%

00:49

of that initial $500, and then do the same another two times…

00:53

…or we can use our handy-dandy compounding interest formula.

00:57

What is it?

00:58

Amount earned after n years equals the initial amount times 1 plus the

01:04

interest rate to the power of n…years.

01:08

So…plugging in what we know…

01:11

500 times the quantity 1 plus .08 to the third power…right third power

01:17

since that’s how many years have gone by.

01:20

Looks like our answer is C, since we get $629.86.

01:24

Well…WE don’t get $629.86. It would be nice though.

01:27

We could really use a five-year supply of magic beans…

01:42

Related Videos

SAT Math 2.1 Geometry and Measurement
2779 Views

SAT Math 2.1 Geometry and Measurement. What is the measure of angle z in terms of x and y?

SAT Math 9.4 Algebra and Functions
1300 Views

SAT Math 9.4 Algebra and Functions

SAT Math 9.2 Algebra and Functions
377 Views

SAT Math 9.2 Algebra and Functions

SAT Math: Identifying an Equation for the Average of Two Percentages
23 Views

In 2014, the unemployment rate of one county in California was 7%. In another county, the unemployment rate was 11%. Which of the following express...

SAT Math: Which Equation Represents Profit?
13 Views

Angela is making cookies for a bake sale. She expects each batch of her cookies to sell for $40. It costs her $10 to make one batch of cookies, and...