Question

How much would $200 invested at 5% interest compounded monthly be worth after 9years? Round your answer to the nearest cent

Answer 1

$311.20

Explanation:

Here we are required to use the Compound interest formula for finding the Amount at the end of 9th year

The formula is given as

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

Where ,

A is the final amount

P is the initial amount = $200

r is the rate of interest = 5% annual = 0.05

n is the frequency of compounding in a year ( Here it is compounding monthly) = 12

t is the time period = 9

Now we substitute all these values in the formula and solve for A

`A=200(1+(0.05)/(12))^(9* 12)`

`A=200(1+0.00416)^(108)`

`A=200(1.00416)^(108)`

`A=200 * 1.556`

`A=311.20`

Hence the amount after 9 years will be $311.20