Question

Find the total future amount for $500 invested at 2.02% for 5 years
compounded monthly.
State your answer in terms of dollars rounded to the nearest cent
(hundredth).
Do not include a $ sign with your response.

Correct Answer is but explain how
553.09

Answer 1

monthly compound interest formula is
P(1+(r/12)^12t
Where p is the principal amount (starting money), r is the rate (in decimal form), and t is time
2.02% is 0.0202 in decimal form
So to plug in our values:
500(1+0.00168333)^12(5)
Plug that in the calculator and then you get
553.09134377
Round to the nearest cent (unless indicated otherwise)
And then you get
553.09