Math Problem Statement

  1. You win the lottery and get $1,000,000. You decide that you want to invest all of the money in a savings account for 5 years. A bank representative offers you two different savings plans. Plan 1-The bank gives you a 6% interest rate and compounds the interest each month. Plan 2- The bank gives you a 12% interest rate and compounds the interest each month. A) How much money will you have at the end of the 5 years in plan 1? Round to the nearest cent. Show all your work.

Solution

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Math Problem Analysis

Mathematical Concepts

Compound Interest
Exponential Growth
Algebra

Formulas

A = P(1 + r/n)^(nt)
A = 1,000,000(1 + 0.06/12)^(12*5)

Theorems

Compound Interest Theorem

Suitable Grade Level

Grades 10-12