Question

Julie deposits $3,300 into an account that earns 3¾% interest compounded monthly. How much interest will she earn in 1 month? What will her new balance be?

Answer 1

At compound interest, the amount in the account will be:

`Amount\: at\: Compound\: Interest=P(1+(r)/(n))^(nt)`

Principal, P=$3,300

Interest rate = 3¾% =0.0375

Time = 1 month

Therefore, the amount in her account after a month will be:

`\begin{gathered} =3300(1+(0.0375)/(12))^1 \\ =3300(1+0.003125)^1 \\ =3300(1.003125)^1 \\ =\$3310.31 \end{gathered}`

• Her new balance =$3310.31

The amount of interest earned in 1 month = $3310.31 -3300 =$10.31