Question #55b15

1 Answer
Oct 1, 2017

#A=$22196.40#

Explanation:

The formula for calculating compound interest is:

#A=P(1 + r/n) ^ (nt)#

where

A = future value of investment, including interest

P = principal investment or initial deposit

r = annual interest rate in decimal

n = the number of times that interest is compounded in 1 year

t = the number of years the money is invested

For this question:

#P=10000#

#r=0.08# which is #8%# in decimal

#n=12# since the interest if compounded monthly

#t=10#

Plugging everything into the equation:

#A=10000(1+0.08/12)^((12)(10))#

#A=10000(1+0.08/12)^120#

Make sure to calculate what is in the brackets and raise it to the power of #120# before multiplying by #10000#:

#A=$22196.40#