Question

A kitty in a tuxedo walks into a bank deposit of $4000 in an investment account. the account earns 8% interest, compounded monthly. after 10 years how much money will the fancy kitty have?

Answer 1

Answer:

The amount of money Kitty would have is;

$\text{ \ }8,878.56$

Explanation:

Given that Kitty invested $4000 into an account that earns 8% interest compounded monthly for 10 years;

$\begin{gathered} \text{ Principal P = \ 4000} \\ \text{ Rate r = 8\% = 0.08} \\ \text{ Time t =10 years} \\ \text{ number of times compounded per time n = 12} \end{gathered}$

Applying the formula for compound interest;

$F=P(1+\frac{r}{n})^{nt}$

Substituting the given values;

$\begin{gathered} F=4000(1+\frac{0.08}{12})^{12(10)} \\ F=4000(1+\frac{0.08}{12})^{120} \\ F=4000(2.2194) \\ F=\text{ \ }8,878.56 \end{gathered}$

Therefore, the amount of money Kitty would have is;

$\text{ \ }8,878.56$