Question

$765.13 is deposited at the end of each month for 2 years in an account paying 12% interest compounded monthly. Find the amount of the account. Round your answer to the nearest cent.

Answer 1

Answer: The amount in the account is $971.51

Explanation:

Initial amount deposited was $765.13. This means that the principal is $765.13, so

P = 765.13

It was compounded monthly. This means that it is not compounded yearly, semi annually, quarterly and other intervals. So

n = 12

The rate at which the principal was compounded is 12%. So

r = 12/100 = 0.12

It was compounded for a total of 2 years. So

n = 2

The formula for compound interest is

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

A = total amount compounded at the end of n years

A = 765.13(1 + 0.12/12)^12×2

A = 765.13(1 + 0.01)^24

A = 765.13(1.01)^24

A = 765.13 × 1.26973464853

A = 971.51207163122

Approximately $971.51

Answer 2

$20,638

Explanation:

Given:

$765.13 is deposited at the end of each month, that is the payment per month

=> PMT = $765.13

• n = 2 years = 24 months

• Rate: 12% per year = 1% = 0.01 per month

So we use the following formula to find out the amount of the account that is the future value of it

• FV = PMT [
  `(1+i)^(n-1)`) / i]

= $765.13 (
`(1+0.01)^(24-1)` )/0.01]

= $20,638

Hope it will find you well.