Question

To save money for a future house, a couple places $4,000 in an interest bearing savings account every month. The account pays 9% annual interest, compounded monthly. How much will the account be worth 8 years after it is opened (to the nearest cent)?

Answer 1

Answer:

The formula to calculate the amount after being compounded is given below as

$\begin{gathered} A=P(1+\frac{r}{n})^{nt} \\ P=4000 \\ r=9\%=\frac{9}{100}=0.09 \\ n=12 \\ t=8 \end{gathered}$

By substituting the values, we will have

$\begin{gathered} A=P(1+\frac{r}{n})^{nt} \\ A=4000(1+\frac{0.09}{12})^{12\times8} \\ A=4000(1+0.0075)^{96} \\ A=4000(1.0075)^{96} \\ A=8195.68 \end{gathered}$

Hence,

The final answer is

$\Rightarrow8,195.68$