Question

Suppose you deposit $1000 in a savings account that compounds interest monthly. What is your account balance after 25 years if the interest rate is 3%?

Answer 1

The balance is computed from
A = P(1 +r/n)^(nt)
where P is the principal, r is the annual interest rate, n is the number of times per year interest is compounded, and t is the number of years.

A = 1000(1 +.03/12)^(12*25) ≈ 2115.02

The account balance after 25 years will be $2,115.02.