Question

You deposit $ 1,821 in an account earning 3 % interest compounded monthly. How much will you have in the account in 1 years?$__________ (Give your answer accurate to 2 decimal places)

Answer 1

Using the compound interest formula:

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

Where:

A = Amount

P = Principal = $1821

r = Interest rate = 3% = 0.03

n = Number of times interest is compounded per year = 12

t = Time = 1

So:

$\begin{gathered} A=1821(1+\frac{0.03}{12})^{12\cdot1} \\ A\approx1876.39 \end{gathered}$

Answer:

$1876.39