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SAT Math 1.4 Numbers and Operations. Solve the equation.
SAT Math 1.1 Numbers and Operations. How many combinations of beverage and cereal can be made?
SAT Math 2.3 Numbers and Operations 194 Views
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Description:
SAT Math 2.3 Numbers and Operations. If Joaquin invests $500, how much will the investment be worth after 3 years?
- Numbers and Operations / Ratios, Proportions, and Percents
- Algebra and Functions / Word Problems
- Product Type / SAT Math
- Mathematics and Statistics Assessment / Word Problems and Applications
- Algebra / Create equations that describe numbers or relationships
- Algebra / Create equations that describe numbers or relationships
- Algebra / Create equations that describe numbers or relationships
- Heart of Algebra / Interpreting linear functions
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...
Full Transcript
- 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
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