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If you invest 9097 euro into an account earning an annual interest rate of 7.595%, how much will you have in your account after 8 years if the interest is compounded monthly?

Option 1: €12,963.99
Option 2: €12,999.99
Option 3: €13,000.00
Option 4: €13,100.00

1 Answer

6 votes

Final answer:

To calculate the amount in your account after 8 years with monthly compounding, use the compound interest formula. The correct amount is approximately €12,963.99.

Step-by-step explanation:

To calculate the amount in your account after 8 years with monthly compounding, we can use the compound interest formula:

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

Where:
P = Principal amount (initial investment)
r = Annual interest rate (in decimal form)
n = Number of times the interest is compounded per year
t = Number of years

In this case, P = 9097 euro, r = 7.595% or 0.07595, n = 12 (since interest is compounded monthly), and t = 8 years. Plugging the values into the formula, we get:

A = 9097(1 + 0.07595/12)^(12*8)

A = 9097(1 + 0.00632916667)^96

A ≈ €12,963.99

Therefore, the correct option is Option 1: €12,963.99.

User Prashant G Patil
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