Question

John invested $740 in an account paying an interest rate of 6.7% compounded monthly. Assuming no deposits or withdrawals are made, how much money, to the nearest ten dollars, would be in the account after 6 years?

Answer 1

Answer: $ 1,100

Explanation:

Hi, to answer this question we have to apply the compounded interest formula:

A = P (1+r/n)^nt

Where:

A= future value of investment

P= principal invest amount

r = interest rate ( in decimal form, percentage divided by 100)

n = number of times that the interest is compounded per year (in this case 12 times, because there are 12 months in one year)

t= years

Replacing with the values given:

A = 740 (1+0.067/12 )^(12x6)

A = 1,104.92= 1,100 (rounded to the nearest ten dollars)

Answer 2

The amount which will be in account after 6 years is $ 1120 .

Explanation:

Given as :

The principal in the account = $740

The rate of interest = 6.7 % compounded monthly

The time period = 6 years

Let the Amount in the account after 6 years = A

From compound interest method

Amount = Principal ×
`(1+(\textrm Rate)/(12* 100))^(12* \textrm Time)`

Or, A = $ 740 ×
`(1+(\textrm 6.7)/(12* 100))^(12* \textrm 6)`

Or, A = $ 740 ×
`(1.0058)^(72)`

or, A = $ 740 × 1.5164 = $ 1122.136

Hence The amount which will be in account after 6 years is $ 1120 . Answer