Question

You deposit $ 3,508 in an account earning 10 % interest compounded monthly. How much will you have in the account in 4 years?

Answer 1

The amount of money A in an account with an interest rate r compounded 12 times a year, after t years and if a principal P is invested, is given by the formula:

$A=P(1+\frac{r}{12})^{12\times t}$

Replace P=3,508, r=10/100 and t=4 to find the amount of money that the account will be worth after 4 years:

$A=3508(1+\frac{0.1}{12})^{12\times4}=3508(1.489354099\ldots)=5224.654178\ldots$

Therefore, to the nearest cent, the amount of money in the account after 4 years will be:

$5224.65$