Question

Bella wants to save for a vacation in three years and this vacation costs $2300. She deposits $2000 into a bank earning 5% interest compounded monthly. How much money does Bella have after 3 years?

Answer 1

$2,323.2

Explanation:

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

Where,

A = future value = ?

P = present value = 2,000

r = interest rate = 5% = 0.05

n = number of periods = 12

t = time = 3 years

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

= 2,000(1 + 0.05/12)^12*3

= 2,000( 1 + 0.00417)^36

= 2,000( 1.00417)^36

= 2,000(1.1616)

= 2,323.2

A = $2,323.2