Question

7,300 deposit earning 3.3% compounded monthly after 1 year. What will the balance after 1 year will be?

Answer 1

$7,544.58

Explanation:

We will 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 3.3% into its decimal form:

3.3% ->
`(3.3)/(100)` -> 0.033

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

`A=7,300(1+(0.033)/(12))^(12(1))`

`A=7,544.58`

The balance after 1 year will be $7,544.58