Answer:
[tex]A\approx\$880.68[/tex]
Step-by-step explanation:
So, we know that Jolene bought an initial $750.
We also know that the purchase is increasing at an average rate of 5 1/2 %or 5.5%. In other words, this is being compounded.
So, we can use the compound interest formula, which is:
[tex]A=P(1+\frac{r}{n})^{nt}[/tex]
Where A is the total amount, P is the principal value, r is the rate and n is the number of times compounded per year, and t is the amount of years.
So, substitute 750 for P. 5 1/2% is the same as 5.5% or 0.055 (you move the decimal two places to the left and remove the percent symbol) so substitute this for r. Since it's increasing yearly, n is 1. So, our formula is:
[tex]A=750(1+0.055)^t[/tex]
Add:
[tex]A=750(1.055)^t[/tex]
Since the stock was bought 3 years ago, the value now is t=3. So, substitute 3 for t and evaluate:
[tex]A=750(1.055)^3[/tex]
Evaluate. Use a calculator:
[tex]A\approx\$880.68[/tex]
And we're done!
