Question

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?

Answer 1

$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.