Question

Joe puts $500.00 into an account to use for school expenses. The account earns 2% interest, compounded monthly. How much will be in the account after 6 years?

Answer 1

A = $563.69

Explanation:

First, convert R as a percentage to R as a decimal

r = R/100

r = 2/100

r = 0.02 rate per year,

Then solve the equation for A

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

A = 500.00(1 + 0.02/12)^(12)(6)

A = 500.00(1 + 0.0016666666666667)^(72)

A = $563.69

Summary:

The total amount accrued, principal plus interest, with compound interest on a principal of $500.00 at a rate of 2% per year compounded 12 times per year over 6 years is $563.69.