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Popular Word Problems >

Melanie invests 7600 in a new savings account which earns 4.0% annual interest, compounded monthly. What will be the value of her investment after 2 years? Round to the nearest cent.

Solution

M e l ani e in v es t s 7600 in a n e w s a v in g s a cco u n t w hi c h e a r n s 4.0% ann u a l in t eres t, co m p o u n d e d m o n t h l y . Wha t w i ll b e t h e v a l u e o f h er in v es t m e n t a f t er 2 ye a rs ? R o u n d t o t h e n e a res t ce n t .

Solution

Amount : 8231.89

Solution steps

Translate the problem into an equation:

A = 7600 (1 + \frac{0.04}{12})^{12 \cdot 2}

7600 (1 + \frac{0.04}{12})^{12 \cdot 2} = 8231.88648 \dots

Round to the nearest hundredth:

8231.89

Amount : 8231.89

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