Question

Kelly will deposit $4,500 into an account that pays 1.25% interest, compounded monthly. How much interest will this account earn in 8 years?

Answer 1

496.35$

Explanation:

Principal = $4,500

Interest Rate = 1.25%

Compounding Frequency = 12 (monthly)

Number of Compounding Periods = 8 * 12 = 96

Interest = 4500 * (1 + 0.0125 / 12) ^ 96 - 4500

Interest = 4500 * 1.010417 ^ 96 - 4500

Interest = 4500 * 1.103005 - 4500

Interest = $496.35