Sylvia decides to put a recent 85,600 inheritance away into an investment account gaining 9.5% interest compounded monthly. How much will be in the account at the end of 10 years? Round to the nearest cent. Explain how you got your answer

Solution

S y l v ia d ec i d es t o p u t a rece n t 85, 600 inh er i t an ce a w a y in t o an in v es t m e n t a cco u n t g ainin g 9.5% in t eres t co m p o u n d e d m o n t h l y . Ho w m u c h w i ll b e in t h e a cco u n t a t t h e e n d o f 10 ye a rs ? R o u n d t o t h e n e a res t ce n t . E x pl ain h o w yo u g o t yo u r an s w er

Amount : 220510.34

Solution steps

Translate the problem into an equation:

A = 85600 (1 + \frac{0.095}{12})^{12 \cdot 10}

85600 (1 + \frac{0.095}{12})^{12 \cdot 10} = 220510.34194 \dots

Round to the nearest hundredth:

220510.34

Amount : 220510.34