Question

You deposit $1000 in an account that pays 4 1/2% annual interest compounded monthly. How much will you have in the bank after 9 years

Answer 1

Explanation:

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

A = ?

I = $1000

r = 4.5% = 4.5/100 = 0.045

n = 12

t = 9

A = 1000(1+0.045/12)^108

A = 1000(1.00375)^108

A = $1498.17

Answer 2

1498.17

Explanation:

formula A = P
`(1 + (r)/(100) )^(n)` where r is the rate of interest compounded and n is the number of times compounded.

r = 4.5 / 12 = 0.375 since it is compounded monthly thus need to divide by 12 months

n = 9 x 12 = 108 ( 9 years in months)

A = 1000
`(1 + (0.375)/(100))^(108)` = 1498.167