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Popular Word Problems >

Billy opened a savings account and deposited 700.00 as principal. The account earns 1% interest, compounded monthly. What is the balance after 5 years?

Solution

B i ll y o p e n e d a s a v in g s a cco u n t an d d e p os i t e d 700.00 a s p r in c i p a l . T h e a cco u n t e a r n s 1% in t eres t, co m p o u n d e d m o n t h l y . Wha t i s t h e ba l an ce a f t er 5 ye a rs ?

Solution

Amount : 735.87

Solution steps

Translate the problem into an equation:

A = 700 (1 + \frac{0.01}{12})^{12 \cdot 5}

700 (1 + \frac{0.01}{12})^{12 \cdot 5} = 735.87444 \dots

Round to the nearest hundredth:

735.87

Amount : 735.87

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