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Popular Word Problems >

A retirement account is opened with an initial deposit of 6, 500 and earns 6.12% interest compounded monthly. What will the account be worth in 20 years?

Solution

A re t i re m e n t a cco u n t i s o p e n e d w i t h an ini t ia l d e p os i t o f 6, 500 an d e a r n s 6.12% 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 t h e a cco u n t b e w or t h in 20 ye a rs ?

Solution

Amount : 22036.31

Solution steps

Translate the problem into an equation:

A = 6500 (1 + \frac{0.0612}{12})^{12 \cdot 20}

6500 (1 + \frac{0.0612}{12})^{12 \cdot 20} = 22036.31002 \dots

Round to the nearest hundredth:

22036.31

Amount : 22036.31

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