Question

$800 is invested at a rate of 4% and is compounded monthy. find the balance after 10 years

Answer 1

$1,192.67

Explanation:

Interest is the amount of money that an initial investment earns.

Compound Interest

The question states that the interest is compounded monthly. Compound interest is when the amount of interest earned increases periodically. In this case, since the interest is compounded monthly, it is compounded 12 times a year. This means that the interest will increase at a faster rate than simple interest. With the information we were given, we can use a formula to find the total balance after 10 years.

Compound Interest Formula

The formula for compound interest is as follows:

• 
  `A = P(1+(r)/(n))^(nt)`

In this formula, P is the principal (initial investment), r is the interest rate as a decimal, n is the number of times compounded per year, and t is the time in years. So, to find the total balance, all we need to do is plug in the information we were given.

• 
  `A = 800(1 +(0.04)/(12) )^(12*10)`
• A = 1,192.67

So, after 10 years, the balance will be $1,192.67.