Question

Jennifer places $500 into a savings account that is paying 1.5% annual interest. The interest is compounded monthly. How much money will be in the account in 3 years?

Answer 1

$522.99

Explanation:

`FV = P (1 + (r)/(n) )^n^t`

Fv = total amount plus interest over the given period of time

P = Principal amount deposited i.e $500

r = interest given 1.5% i.e 0.015

n = period of time the principal remains deposited. In this case annually i.e 12 months

`FV = 500 ( 1 + (0.015)/(12) ) ^1^2^X^3`

`FV = 500 ( 1.04599)`

FV = $522.99