Question

Julie invests $200 per month in an account that earns 6 percent interest per year compounded monthly. After 10 years, Julie’s account balance will be:

a) $28,603.47
b) $24,000.00
c) $32,000.00
d) $20,000.00

Answer 1

Julie's account balance after 10 years will be approximately $32,000.00, So the correct option is c.

Step-by-step explanation:

To calculate Julie's account balance after 10 years, we can use the formula for compound interest:

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

Where:

• A is the final account balance
• P is the monthly deposit ($200 in this case)
• r is the interest rate per year (6% in this case)
• n is the number of times the interest is compounded per year (12, since it's compounded monthly)
• t is the number of years (10 in this case)

Substituting the values into the formula:

A = 200(1+0.06/12)^(12*10)

Simplifying the equation:

A = 200(1+0.005)^120

Calculating:

A = 200(1.005)^120

A ≈ $32,000.00

So, after 10 years, Julie’s account balance will be $32,000.00. So the correct option is c.