Question

Michelle invested $10,000 in an account that earns 8.5% interest that is compounded monthly. Determine the amount of money in the account in 15 years

Answer 1

Given:

The principal value = $10,000

Rate of interest = 8.5% compounded monthly.

To find:

The amount of money in the account in 15 years.

Solution:

The formula for amount is:

`A=P\left(1+(r)/(n)\right)^(nt)`

Where, P is principal, r is the rate of interest in decimal, n is the number of times interest compounded in an year, t is the number of years.

Number of months in an year is 12. So, n=12.

Substitute
`P=10000, r=0.085, n=12, t=15` in the above formula.

`A=10000\left(1+(0.085)/(12)\right)^(12(15))`

`A=10000\left((12.085)/(12)\right)^(180)`

`A=35626.53335`

`A\approx 35626.53`

Therefore, the amount of money in the account in 15 years is $35626.53.