Question

Spencer opened a savings account and deposited $10. The account pays 3.5% interest and compounds the interest monthly. How much money will Spencer have after 10 years? **n=12 because it is compounded monthly.

Answer 1

`\$14.18`

Explanation:

we know that

The compound interest formula is equal to

`A=P(1+(r)/(n))^(nt)`

where

A is the Final Investment Value

P is the Principal amount of money to be invested

r is the rate of interest in decimal

t is Number of Time Periods

n is the number of times interest is compounded per year

in this problem we have

`t=10\ years\\ P=\$10\\ r=0.035\\n=12`

substitute in the formula above

`A=P(1+(0.035)/(12))^(12*10)=\$14.18`