Question

You deposit $20,000 in an account that pays 7.77% annual interest. Find the balance after 2 years when the interest is compounded monthly.

The balance after 2 years is $.

Answer 1

=$23,350.802

Explanation:

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

Where,

P=principal=$20,000

r=Interest rate=7.77%=7.77/100

=0.0777

n=number of periods=12 month in a year

t=time=2 years

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

=$20,000(1+0.0777/12)^12×2

=$20,000(1+0.006475)^24

=$20,000(1.006475)^24

=$20,000(1.1675401)

=$23,350.802