SAT Math 2.3 Numbers and Operations. If Joaquin invests $500, how much will the investment be worth after 3 years?

Algebra | Create equations that describe numbers or relationships Word Problems |

Algebra and Functions | Word Problems |

Heart of Algebra | Interpreting linear functions |

Mathematics and Statistics Assessment | Word Problems and Applications |

Numbers and Operations | Ratios, Proportions, and Percents |

Pre-Algebra | Ratios, Percentages, and Proportions |

Product Type | SAT Math |

SAT Math | Numbers and Operations |

We’re so glad we talked Joaquin out of investing his money in that magic bean business he was so hot on.

So he makes 8% interest on his investment each year…

…which means that, at the end of each year, he has 108% of the amount he had a year earlier.

There are two ways we can go from here. We can grind it out and just manually take 108%

of that initial $500, and then do the same another two times…

…or we can use our handy-dandy compounding interest formula.

What is it?

Amount earned after n years equals the initial amount times 1 plus the

interest rate to the power of n…years.

So…plugging in what we know…

500 times the quantity 1 plus .08 to the third power…right third power

since that’s how many years have gone by.

Looks like our answer is C, since we get $629.86.

Well…WE don’t get $629.86. It would be nice though.

We could really use a five-year supply of magic beans…