A bank offers an investment account with an annual interest rate of 1.17% compounded monthly. Bob invests 3500 into the account for years.Answer the questions below. Do not round any intermediate computations, and round your final answers to the nearest cent. If necessary, refer to the list of financial formulas. Assuming no withdrawals are made, how much money is in Bob's account after 2 years?

Solution

A bank o ff ers an in v es t m e n t a cco u n t w i t h an ann u a l in t eres t r a t e o f 1.17% co m p o u n d e d m o n t h l y . B o b in v es t s 3500 in t o t h e a cco u n t f or ye a rs . A n s w er t h e q u es t i o n s b e l o w . Do n o t ro u n d an y in t er m e d ia t e co m p u t a t i o n s, an d ro u n d yo u r f ina l an s w ers t o t h e n e a res t ce n t . I f n ecess a ry, re f er t o t h e l i s t o f f inan c ia l f or m u l a s . A ss u min g n o w i t h d r a w a l s a re ma d e, h o w m u c h m o n ey i s in B o b^{'} s a cco u n t a f t er 2 ye a rs ?

Amount : 3582.82

Solution steps

Translate the problem into an equation:

A = 3500 (1 + \frac{0.0117}{12})^{12 \cdot 2}

3500 (1 + \frac{0.0117}{12})^{12 \cdot 2} = 3582.82490 \dots

Round to the nearest hundredth:

3582.82

Amount : 3582.82