Question

Find the balance in the account after the given period.$2,200 deposit earning 4.2% compounded monthly, after 2 years.The balance after 2 years will be $ (Round to the nearest cent as needed.)

Answer 1

We use future value formula:

$FV=P(1+r)^t$

Where

FV is future amount

P is principal amount

r is rate of interest, in decimal

t is time

Given,

P = 2200

since compounded monthyl, we find the monthly interest rate,

4.2% = 0.042 per year, so monthly:

0.042/12 = 0.0035

t = 2 years, but in months, that is: 2 * 12 = 24 months

Now, let's plug in and solve:

$\begin{gathered} FV=P(1+r)^t \\ FV=2200(1+0.0035)^{24} \\ FV=2200(1.0035)^{24} \\ FV=2392.43 \end{gathered}$