Question

a saving account earns 4% interest a year. when compounded monthly what would a $200 deportable in 3 years?

Answer 1

Explanation:

The formula for this is

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

where A(t) is the amount in the account after a certain amount of time, t, goes by (in years). P is the initial deposit, r is the interest rate in decimal form, and n is the number of times the interest compounds yearly. For us:

P = $200

r = .04

t = 3

n = 12 (there are 12 months in a year). Filling in:

`A(t)=200(1+(.04)/(12))^((12)(3))` and simplifying a bit:

`A(t)=200(1+.0033333333)^(36)` and a bit more:

`A(t)=200(1.00333333333)^{36` and a tiny bit more:

A(t) = 200(1.127271875) gives us

A(t) = $225.45