Problema Solution
An initial deposit of $10,000 earns 8% interest, compounded monthly. How much will be in the account after 13 years?
Answer provided by our tutors
P = $10,000 the principal
r = 0.08 or 8% annual interest rate
t = 13 years
m = 12 compounding periods per year
i = 0.08/12 = 0.04/3 interest rate per period
n = 12*13 = 156 total number of compounding periods
A = the future value
A = P(1 + i)^n
A = 10000(1 + 0.04/3)^156
A = $28,194.69
there will be $28,194.69 in the account after 13 years.