新托福考试_Common Word Problems

More Complicated Exponential Growth Problem


	A bank offers a 4.7% interest rate on all savings accounts, compounded monthly. If 1000 dollars is initially put into a savings account, how much money will the account hold two years later?

This problem is a bit tricky for the simple reason that the interest on the account is compounded monthly. This means that in the 2 years that question refers to, there will be 2

12 = 24 compoundings of interest. The time variable in the equation is affected by these monthly compoundings: it will be 24 instead of 2. Thus, our answer is:

Here’s another compounding problem:


	Sam puts 2000 dollars into a savings account that pays 5% interest compounded annually. Chris puts 2500 dollars into a different savings account that pays 4% annually. After 15 years, whose account will have more money in it, if no more money is added or subtracted from the principal?

Sam’s account will have $2000

1.05¹⁵ ≈ $4157.85 in it after 15 years. Chris’s account will have $2500

1.04¹⁵ ≈ $4502.36 in it. So, Chris’s account will still have more money in it after 15 years. Notice, however, that Sam’s account is gaining on Chris’s account.

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