Question

Autumn deposited $500 into a savings account with a 1.8% interest rate, compounding monthly. Use the compound interest formula to determine how much money she will have after 4 years. Show your work.

Answer 1

By definition we have that the compound interest formula is:

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

Where

A: amount

P: principal

r: interest rate (decimal)

n: number of times interest is compounded per year

t: time years

Substituting values we have:

$A=500(1+\frac{0.018}{12})^{12(4)} A = 537.3$

Answer:

after 4 years she will have about:

$y = 537.3$