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Clark will have $5820.80 in his account when he turns 22.
With an example, what is compound interest?
The interest you earn on interest is known as compound interest. Simple math may be used to demonstrate this: if you have $100 and it generates 5% interest annually, you will have $105 at the end of the first year. You will wind up with $110.25 at the conclusion of the second year.
Clark reportedly placed $5000 at a constant 3.8% interest rate when he was 18 years old.
Using the compound interest calculation, we can calculate how much Clark will make when he turns 22.
[tex]A=P . e^{rT}[/tex]
A= Amount after T years.
P= Principal amount.
e= Mathematical constant e.
r= Interest rate (in decimal form).
T= Time in years.
Let's decimalize the interest rate we've been given.
3.8 percent = 3.8/100 = 0.038
When we enter our provided values into the formula above, we will obtain,
[tex]A=5000 * e^{0.038(22-18)} \\A=5000*e^{0.038(4)}\\A=5000*e^{0.152}\\A=5000*1.1641\\A=5820.80[/tex]
Clark will therefore have $5820.80 in his account when he turns 22.
Learn more about compound interest
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