Question

1. Sam deposits$700 in an investment saving account. The annual
interest rate is 4.5%/annually compounded monthly. Determine

the amount after 7 years.​

Answer 1

Answer:

The total amount in 7 years is: $958.62

Step-by-step explanation:

Recall the formula for compound interest:

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

where:

A is the Accrued value (total in the account including accumulated interest), and in our case the unknown.

P is the Principal (amount initially deposited), and in our case $700.

r is the annual percent rate (but in decimal form) in our case 0.045

n is the number of compoundings done per year, and in our case 12 since it is compounded monthly

t is the time in years of the deposit.

Then the formula becomes:

$A=P\,(1+\frac{r}{n} )^{n\,t}\\A=700\,(1+\frac{0.045}{12} )^{12\,*\,7}\\A=958.61657$

which can be rounded to the cents: $958.62