 Quandaries and Queries Who is asking: Student Level: Secondary Question: this is the problem: suppose u have \$25,000 to invest and the interest rate at your bank is 11%. 1) how much money would you have at the end of EACH of the first four years? 1) i already kno that the first year w/ interest is \$27,750 but how do i get the 2nd? 3rd? 4th? years? 2)How much money would you have in 10 years? 2) do i just add up all the years? 3) find an equation for how much money you would have after n years? 3) will the equation be linear or exponental or neither? or what? can u please try to explain this, i kno it has to do w/ geometric sequences, so if u could incorporate that into these problems that would be great, thanks Hi, If the bank says "the interest rate is 11% per year" they mean that it is 11% per year, compounded yearly. That is, at the end of each year you get the principle (what you started the year with) plus 11% of the principle. Thus, as you noted, at the end of the first year you get \$25,000 plus 11% of \$25,000 which is \$25,000 + 11/100 \$25,000 = \$25,000 + 0.11 \$25,000 = 1.11 \$25,000 = \$27,750 Now, at the beginning of the second year you have a principle of \$27,750 so at the end of the second year you have \$27,750 + 11/100 \$27,750 = 1.11 \$27,750 = 1.11 1.11 \$25,000 = 1.112 \$25,000 = \$30,802.50 This is the principle at the beginning of the third year, so at the end of the third year you have 1.112 \$25,000 + 11/100 (1.112 \$25,000) = 1.113 \$25,000 Does this help? Penny Go to Math Central