Challenge: Predicting Savings Growth
Swipe to start coding
A financial advisor wants to estimate how a client's savings grow over time when interest is compounded regularly. This type of growth follows a geometric progression, where the savings increase by a constant factor each compounding period.
The total savings can be calculated using the compound interest formula:
A=P(1+nrβ)ntWhere:
- A β final amount after all interest is applied;
- P β initial deposit;
- r β annual interest rate (as a decimal);
- n β number of compounding periods per year;
- t β time in years;
-
Calculate the final savings amount after 20 years using:
- Initial deposit: P=10000.
- Annual interest rate: r=0.08.
- Monthly compounding: n=12.
- Time period: t=20.
-
Calculate the total interest earned by subtracting the initial deposit from the final amount.
Solution
Thanks for your feedback!
single
Ask AI
Ask AI
Ask anything or try one of the suggested questions to begin our chat
Awesome!
Completion rate improved to 1.96
Challenge: Predicting Savings Growth
Swipe to show menu
Swipe to start coding
A financial advisor wants to estimate how a client's savings grow over time when interest is compounded regularly. This type of growth follows a geometric progression, where the savings increase by a constant factor each compounding period.
The total savings can be calculated using the compound interest formula:
A=P(1+nrβ)ntWhere:
- A β final amount after all interest is applied;
- P β initial deposit;
- r β annual interest rate (as a decimal);
- n β number of compounding periods per year;
- t β time in years;
-
Calculate the final savings amount after 20 years using:
- Initial deposit: P=10000.
- Annual interest rate: r=0.08.
- Monthly compounding: n=12.
- Time period: t=20.
-
Calculate the total interest earned by subtracting the initial deposit from the final amount.
Solution
Thanks for your feedback!
single