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If Bob and Judy combine their savings of ​$1 comma 700 and ​$700​, ​respectively, and deposit this amount into an account that pays 3 % annual​ interest, compounded​ monthly, what will the account balance be after 12 ​years?

User Oss
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1 Answer

6 votes

Answer:

$3,438.45

Step-by-step explanation:

The amount invested is the sum of Bob's and Judy's savings:


P=\$1,700+\$700\\P=\$2,400

The equation that gives the future value of an investment P, at an annual interest rate r for t years, compounded monthly, is:


FV = P*(1+(r)/(12))^(12t)

Therefore, the account balance after 12 years of an initial investment of $2,400 at 3% is:


FV = \$2,400*(1+(0.03)/(12))^(12*12)\\ FV= \$3,438.45

The account balance after 12 ​years will be $3,438.45.

User Yalkris
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