Question

$3,000 is invested in an account that earns 3% annually interest, compounded monthly.
What is the value of the account after 10 years ?

Answer 1

Answer:

Initial P, principal value is $3000

Year 1:  P(1)= 3000 + 3%(3000)

            P(1)= 3090

Year 2: P(1)= 3090 + 3%(3090)

           P(1)= 3182.70

etc.  

 

So in year 10, using the formula for compound interest, P(t)= P(1.03)t

P(10)= 3000(1.03)10

= 4031.75