Question

rob and Kinsley despoit 1,000.00 into an savings account which earns 12% interest compounded monthly they want to use the money in the account to go on a trip in 2 years how much will they be able to spend

Answer 1

Here,

P = 1000

r = 12% = 0.12

n = 12 (since compounded monthly)

t = 2 (years)

Applying the formula to calculate compound interest, we have,

$\begin{gathered} A=P(1+\frac{r}{n})^{nt} \\ A=1000(1+\frac{0.12}{12})^{24}=1269.73 \end{gathered}$

They will be able to spend 1269.73.