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Popular Word Problems >

Suppose that 12,000is deposited for seven years at 4% APR. Calculate the interest earned if interest is compounded monthly. Round your answer to the nearest cent.

Solution

S u pp ose t ha t 12, 000 i s d e p os i t e d f or se v e n ye a rs a t 4% A PR . C a l c u l a t e t h e in t eres t e a r n e d i f in t eres t i s co m p o u n d e d m o n t h l y . R o u n d yo u r an s w er t o t h e n e a res t ce n t .

Solution

Interest : 3870.17

Solution steps

Translate the problem into an equation:

15870.16636 \dots = 12000 + I

Solve for

I, 15870.16636 \dots = 12000 + I : I = 3870.17

Interest : 3870.17

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