Question

Ted invests $7,000 into an account with a 2.5% interest that is compounded monthly. How much money will he have in this account if he keeps it for 13 years?

Answer 1

He will have $9,684.44 after 13 years

Step-by-step explanation:

Data provided in the question:

Amount invested = $7,000

Interest rate, r = 2.5% compounded monthly = 0.025

Time period, t = 13 years

Now,

Final amount = Amount invested ×
`\left( 1 + (r)/(n) \right)^{\Large{n \cdot t}}`

n = number of times compounded per year = 12 for compounded monthly

Thus,

Final amount = $7,000 ×
`\left( 1 + (0.025)/(12) \right)^{\Large{12*13}}`

or

Final amount = $7,000 × ( 1.002083 )¹⁵⁶

or

Final amount = $7,000 × 1.383491

or

Final amount = $9,684.44

Hence,

He will have $9,684.44 after 13 years