Question

John invests $250 at 15% interest compounded monthly. How much will he have in 20 years?

Answer 1

$4928.87

General Formulas and Concepts:

Pre-Algebra

Order of Operations: BPEMDAS

1. Brackets
2. Parenthesis
3. Exponents
4. Multiplication
5. Division
6. Addition
7. Subtraction

• Left to Right

Algebra I

Compounded Interest Rate Formula:
`\displaystyle A = P(1 + (r)/(n))^(nt)`

• P is principle amount
• r is rate
• n is compound rate
• t is time

Explanation:

Step 1: Define

Identify variables

P = 250

r = 15% = 0.15

n = 12

t = 20

Step 2: Solve

1. Substitute in variables [Compounded Interest Rate Formula]:
   `\displaystyle A = 250(1 + (0.15)/(12))^(12 \cdot 20)`
2. [Exponents] Multiply:
   `\displaystyle A = 250(1 + (0.15)/(12))^(240)`
3. (Parenthesis) Divide:
   `\displaystyle A = 250(1 + 0.0125)^(240)`
4. (Parenthesis) Add:
   `\displaystyle A = 250(1.0125)^(240)`
5. Evaluate exponents:
   `\displaystyle A = 250(19.7155)`
6. Multiply:
   `\displaystyle A = 4928.87`