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a saving account earns 4% interest a year. when compounded monthly what would a $200 deportable in 3 years?

User Whiterose
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1 Answer

6 votes

Answer:

Explanation:

The formula for this is


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

where A(t) is the amount in the account after a certain amount of time, t, goes by (in years). P is the initial deposit, r is the interest rate in decimal form, and n is the number of times the interest compounds yearly. For us:

P = $200

r = .04

t = 3

n = 12 (there are 12 months in a year). Filling in:


A(t)=200(1+(.04)/(12))^((12)(3)) and simplifying a bit:


A(t)=200(1+.0033333333)^(36) and a bit more:


A(t)=200(1.00333333333)^{36 and a tiny bit more:

A(t) = 200(1.127271875) gives us

A(t) = $225.45

User Daniel Wagner
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