Question

An account is opened with an initial deposit of $100 and earns 3.0% interest compounded monthly. What will the account be worth in 25 years? Round your answer to the nearest dollar.

Answer 1

To calculate the future value of an account with compound interest, we can use the formula A = P(1 + r/n)ⁿt . In this case, the future value of the account after 25 years would be approximately $202.69.

Step-by-step explanation:

To calculate the future value of an account with compound interest, we can use the formula:

A = P(1 + r/n)ⁿt

Where:

• A is the future value of the account
• P is the principal (initial deposit)
• r is the annual interest rate (in decimal form)
• n is the number of times interest is compounded per year
• t is the number of years

In this case, the initial deposit (P) is $100, the interest rate (r) is 3.0% (or 0.03), the number of times interest is compounded per year (n) is 12 (monthly compounding), and the number of years (t) is 25:

A = 100(1 + 0.03/12)⁽¹²×²⁵⁾

Using this formula, the future value of the account after 25 years would be approximately $202.69.

Answer 2

A = $211.50

A = P + I where

P (principal) = $100.00

I (interest) = $111.50

Step-by-step explanation: