Question

Stephanie invests $1,345 in a savings account with a fixed annual interest rate of 9% compounded monthly. What will the account balance be after 7 years?

a) $1,978.92
b) $2,743.45
c) $2,160.32
d) $2,437.69

Answer 1

Using the compound interest formula, the future balance of a savings account with a $1,345 initial investment at a 9% annual rate, compounded monthly, after 7 years will be $2,437.69. Thus (option D) is right answer.

Step-by-step explanation:

The student has asked to calculate the future balance of a savings account after 7 years with an initial investment of $1,345, an annual interest rate of 9% compounded monthly. To do this, we can use the compound interest formula: A = P(1 + r/n)^(nt), where:

P is the principal amount ($1,345)

r is the annual interest rate (0.09)

n is the number of times that interest is compounded per year (12)

t is the time the money is invested for (7 years)

Plugging in the values, we get:

A = 1,345(1 + 0.09/12)^(12*7) = 1,345(1 + 0.0075)^(84) = $2,437.69

Therefore, the account balance after 7 years will be $2,437.69, which corresponds to answer choice d).