Question

Find the amount In the account after $600 is invested for 1 year at 7% compounded monthly?

Answer 1

Total amount acrued is `$643.37`

Explanation:

Formula for compound interest : `A=P(1+r/n)^(nt)`

"A" is total amount acrued , "P" is principal , "r" is rate of interest,

"n" is number of periods compounded in a year, "t" is period in

year. `P=$600 , r= 7/100=0.07 , n=12 , t=1`

`A=600(1+0.07/12)^(12*1) ~~ $643.37`

Total amount acrued is `$643.37` [Ans]

Answer 2

`color(blue)($643.37)`

Explanation:

For compound interest, we have the following:

`FV=PV(1+r/n)^(nt)`

Where:

FV = future value. This is the amount after t years.

PV = present value. This is the amount at the beginning.

r = interest rate. This is given as a decimal. i.e. `7%=0.07`

n = compounding period. The number of compounds per year.

t = time. In this case years.

Plugging in known values.

PV = $600

r = 7% = 0.07

n = 12

t = 1

`:.`

`"FV"=600(1+0.07/12)^(12xx1)`

You will need to use a calculator here.

`"FV"=600(1+0.07/12)^(12)=643.3740462`

Amount after 1 year is.

`color(blue)($643.37)`