Question

You deposit $8500 in an account that pays 1.78% annual interest. Find the balance after 10 years when the interest is compounded

monthly
The balance after 10 years is $

Answer 1

Explanation:

step 1. let's call the balance A, the initial amount P, the yearly rate r, the number of compounds yearly n, and the time t.

step 2. A = P(1 + r/n)^(nt) (compounding equation)

step 3. A = 8500(1 + .0178/12)^((12)(10))

step 4. A = 8500(1.00148334)^120

step 5. A = $10,154.68.