Question

Your college fund has $65,000. It is currently in an account which pays 2.3% compounded monthly. How much money will you have in 15 years

Answer 1

$91,749.04

Explanation:

Lets use the compound interest formula provided to solve this:

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

P = initial balance

r = interest rate (decimal)

n = number of times compounded annually

t = time

First, change 2.3% into a decimal:

2.3% ->
`(2.3)/(100)` -> 0.023

Since the interest is compounded monthly, we will use 12 for n. Lets plug in the values now:

`A=65,000(1+(0.023)/(12))^(12(15))`

`A=91,749.04`

You will have $91,749.04 in 15 years.