Question

1. Your grandparents put $1,000 into a saving account for you when you were born 25 years ago. This account has been earning interest at a compound rate of 8%. Fill out the table below. What is its value today?  

	Amount		Interest		End of year
Year	Deposited		Earned		Balance
0	1,000.00		0.00		1,000.00
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25

                            The amount saved should be about à $6,848.48

Answer 1

Interest earned in t years = 8%*Amount deposited in t year

End of year balance in t year= Amount deposited in t year + Interest earned in t years

Amount deposited in t year=End of year balance in t-1 year

Years	Amount Deposited	Interest Earned	End of year balance
0	1000	0	1000
1	1000	80	1080
2	1080	86.4	1166.4
3	1166.40	93.31	1259.71
4	1259.71	100.78	1360.49
5	1360.49	108.84	1469.33
6	1469.33	117.55	1586.87
7	1586.87	126.95	1713.82
8	1713.82	137.11	1850.93
9	1850.93	148.07	1999.00
10	1999.00	159.92	2158.92
11	2158.92	172.71	2331.64
12	2331.64	186.53	2518.17
13	2518.17	201.45	2719.62
14	2719.62	217.57	2937.19
15	2937.19	234.98	3172.17
16	3172.17	253.77	3425.94
17	3425.94	274.08	3700.02
18	3700.02	296.00	3996.02
19	3996.02	319.68	4315.70
20	4315.70	345.26	4660.96
21	4660.96	372.88	5033.83
22	5033.83	402.71	5436.54
23	5436.54	434.92	5871.46
24	5871.46	469.72	6341.18
25	6341.18	507.29	6848.48