Bill invested 4200 in an account that pays an annual interest rate of 3.1%, compounded monthly. Find the amount in the account after one year, assuming no withdrawals are made.Do not round any intermediate computations, and round your answer to the nearest cent.

Solution

B i ll in v es t e d 4200 in an a cco u n t t ha t p a ys an ann u a l in t eres t r a t e o f 3.1%, co m p o u n d e d m o n t h l y . F in d t h e am o u n t in t h e a cco u n t a f t er o n e ye a r, a ss u min g n o w i t h d r a w a l s a re ma d e . 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 an s w er t o t h e n e a res t ce n t .

Amount : 4332.07

Solution steps

Translate the problem into an equation:

A = 4200 (1 + \frac{0.031}{12})^{12 \cdot 1}

4200 (1 + \frac{0.031}{12})^{12 \cdot 1} = 4332.06594 \dots

Round to the nearest hundredth:

4332.07

Amount : 4332.07