Question

Type the correct answer in each box. Round your answers to nearest hundredth if necessary.
Suppose that Esther’s savings account earns an annual interest rate of 3.6% compounded monthly at the end of the month. Determine what just the first deposit of $50 will be worth at the end of a year, or 12 months. Use the interest rate and the formula for the future value of an investment.

Answer 1

Answer:

$\ 51.83$  

Step-by-step explanation:

we know that    

The compound interest formula is equal to  

$A=P(1+\frac{r}{n})^{nt}$  

where  

A is the Final Investment Value  

P is the Principal amount of money to be invested  

r is the rate of interest  in decimal

t is Number of Time Periods  

n is the number of times interest is compounded per year

in this problem we have  

$t=1\ years\\ P=\ 50\\ r=3.6\%=3.6/100=0.036\\n=12$  

substitute in the formula above

$A=50(1+\frac{0.036}{12})^{12*1}$  

$A=50(1.003)^{12}$  

$A=\ 51.83$