Question

If at the end of each month, a saver deposited $100 into a savings account that paid 6 compounded monthly, how much would he have at the end of 10 years?

Answer 1

To calculate the final amount of money in a savings account with compounded interest, we can use the formula: A = P(1 + r/n)^(nt). In this case, the saver would have approximately $181.94 in the savings account at the end of 10 years.

Step-by-step explanation:

To calculate the final amount of money in a savings account with compounded interest, we can use the formula:

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

Where:

• A is the final amount
• P is the principal (initial deposit)
• r is the annual interest rate (in decimal form)
• n is the number of times interest is compounded per year
• t is the number of years

in this case, the principal is $100, the annual interest rate is 6% (which is equivalent to 0.06), and the interest is compounded monthly (so n = 12). Also, the savings period is 10 years (t = 10).

Plugging in the values, we have:

A = 100(1 + 0.06/12)^(12*10) = $181.94

Therefore, at the end of 10 years, the saver would have approximately $181.94 in the savings account.