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Alyson deposits $500 in the bank for 12 years. The bank offers her a 4% interest rate compounded monthly. How much money will be in her account at the end

of the 12 years? (Remember to round your answer to the nearest cent.)
A-$ type your answer.....

User S Gaber
by
7.1k points

2 Answers

3 votes

Answer: $800.516

Explanation:

We use the equation

A = P(1 + )^nt

P = principal

r = rate of interest

t = times

Now let's solve

P = $500

r = 4% = 0.04

t = 12 years

A = $500(1 +
(0.04)/(12) ) ^12 = $800.516

User Rahul Sekhar
by
7.4k points
4 votes

Answer:$917.58.

Explanation:

The formula for compound interest is A = P(1 + r/n)^(nt) where A is the final amount, P is the principal (initial deposit), r is the annual interest rate, n is the number of times the interest is compounded per year, and t is the number of years.

In this case, the initial deposit is $500, the annual interest rate is 4%, the number of times compounded per year is 12 (monthly), and the number of years is 12.

So, we can plug in the values into the formula:

A = $500(1 + 0.04/12)^(12*12) = $500(1.003333333)^(144) = $500(1.835170816) = $917.585

The final amount in her account after 12 years is $917.58

To round to the nearest cent, we can use the following method:

If the digit in the thousandths place is less than 5, we keep the hundredths digit as is.

If the digit in the thousandths place is greater than 5, we round up the hundredths digit.

In this case the digit in the thousandths is 5 so, we have to round up the hundredths digit of $917.58.

So, the final amount in her account after 12 years is $917.59.

User Raashida
by
7.1k points