Question

Solve these compound interest problems and round your answer to the nearest 100th.

1) Find the final amount for a $500 investment at 10% interest compounded monthly for 15 years.

PLEASE SHOW STEP BY STEP

Answer 1

$2,226.96

Explanation:

You are going to want to use the compound interest formula, which is shown below.

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

P = initial balance

r = interest rate

n = number of times compounded annually

t = time

First, change 10% into its decimal form:

10% ->
`(10)/(100)` -> 0.1

Now lets plug in the values into the equation:

`A=500(1+(0.1)/(12))^(15(12))`

`A=2,226.96`

The final amount after 15 years is $2,226.96