The type of savings is the saving of uniform amount with interest applied to the sum of the amount in the account.
- The amount the account is worth after 15 years is approximately $38,841.1
Reasons:
The amount saved per month = $150
Amount saved per year, A = 12 × $150 = $1,800
The interest rate on the account, i = 5%
The amount, F, in the account after 15 years is given as follows;
The uniform series compound amount factor formula is presented as follows;
[tex]\displaystyle F = \mathbf{\frac{A \cdot \left[ \left(1 + i \right)^n - 1 \right]}{i}}[/tex]
Therefore;
[tex]\displaystyle F = \frac{1,800 \times \left[ \left(1 + 0.05 \right)^{15} - 1 \right]}{0.05} \approx \mathbf{38,841.4}[/tex]
The amount the account is worth after 15 years to the nearest cent is approximately $38,841.4.
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