Question

Emmet opened a savings account and deposited 1,000.00 as principal the account earns 8%interest compounded monthly what is the balance after 9 years

Answer 1

We have to use the compound interest formula to solve this problem.

The compound interest formula:

`F=P(1+r)^n`

Where

F is the future value [what we are solving for]

P is the principal, or initial, amount [It is $1000]

r is the rate of interest per period [It is given 8% annual interest, so 8/12 = 0.66% per month, in decimal that is r = 0.0066]

n is the time period [monthly compounding for 9 years is n = 12 * 9 = 108]

Now, we can substitute all the known information and solve for F:

`\begin{gathered} F=P(1+r)^n^{} \\ F=1000(1+0.0066)^(108) \\ F=2048.06 \end{gathered}`

After 9 years, the balance is:

$2048.06