When Frederick was born, his grandparents gave hima a gift of $2000, which was invested at a simple interest rate of 5% per year. How much money will Frederick have when he can collect the monet at the age of 18? ( Assume no money is added to the account besides the interest.)
(1 + (nr)/(100))(\$2000) = 3800
Well, let me calculate that for you. So, Frederick will have the gift of $2000, which was invested at a simple interest rate of 5 percent per year. Now, assuming there is no additional contribution and the interest is not compounded, we can simply multiply the principal amount by the interest rate and the number of years.
So, when Frederick reaches the age of 18, he will have had the money invested for 18 years. Let's do the math:
18 years x 5% = 90%
Hmmm, 90% of $2000 means the investment will have grown by $1800. So, when Frederick can finally collect the money, he will have a grand total of... *drum roll*... $3800!
I hope Frederick's grandparents had a good sense of humor when they gave him such a "growing" gift!
To calculate the amount of money Frederick will have when he can collect it at the age of 18, we need to calculate the future value of the investment after 18 years.
The formula to calculate the future value of an investment with simple interest is:
Future Value = Principal + (Principal * Interest rate * Time)
Given:
Principal (amount invested) = $2000
Interest rate = 5% = 0.05 (in decimal form)
Time = 18 years
Let's plug these values into the formula:
Future Value = $2000 + ($2000 * 0.05 * 18)
Now, we can solve this equation:
Future Value = $2000 + ($2000 * 0.9)
= $2000 + $1800
= $3800
Therefore, Frederick will have $3800 when he can collect the money at the age of 18.