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Popular Word Problems >

You deposit 100 in an investment account that earns 7.8% annual interest compounded monthly.What is the balance of the account after 6 years?

Solution

Y o u d e p os i t 100 in an in v es t m e n t a cco u n t t ha t e a r n s 7.8% 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 i s t h e ba l an ce o f t h e a cco u n t a f t er 6 ye a rs ?

Solution

Amount : 159.44

Solution steps

Translate the problem into an equation:

A = 100 (1 + \frac{0.078}{12})^{12 \cdot 6}

100 (1 + \frac{0.078}{12})^{12 \cdot 6} = 159.43809 \dots

Round to the nearest hundredth:

159.44

Amount : 159.44

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