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.

Answer 1

The account balance after 24 months will be $23,092.70

Explanation:

Given data

P= $20,000

r= 7.77%= 0.077

t= 2 years

A= ?

n= 24

The compound interest formula is

`A= P(1+t)^t`

Inserting our values to solve for A we have

`A= 20000(1+(0.077)/(24) )^2^*^2^4\\\\A= 20000(1+0.003 )^2^*^2^4\\\\A= 20000(1.003 )^2^*^2^4\\\A= 20000(1.003 )^4^8\\\A= 20000*1.15463517818\\\A= 23092.7035636\\\A= 23,092.70`