Question

Kurt and Sidney deposit 700.00 into a savings account which earns 4%interest compounded monthly they want to use the money to in the account to go on a trip in 3 years. how much will they be able to spend

Answer 1

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

A=final amount = ?

P=initial principal balance = 700.00

r=interest rate = 4 % = 0.04

n=number of times interest applied per time period = 12

t=number of time periods elapsed = 3

Solution:

$\begin{gathered} A=P(1+\frac{r}{n})^{nt} \\ A=700(1+\frac{0.04}{12})^{12\text{ ( 3)}} \\ A=700(1.0033)^{36} \\ A=700(1.72727) \\ A=789.09 \end{gathered}$

Answer:

A = 789.09