Problema Solution
Tom deposited $2410 in a bank that pays 12% interest, compounded monthly. Find the amount he will have at the end of 3 years.
Answer provided by our tutors
P = $2,410 the principal
r = 0.12 or 12% interest
m = 12 compounding period per year (compounded monthly)
i = 0.12/12 = 0.01 interest rate per period
t = 3 years
n = t*m = 3*12 = 36 total number of compounding periods
A = future value
A = P(1 + i)^n
A = 2410(1 + 0.01)^36
by solving we find:
A = $3,448.15
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At the end of 3 years Tom will have $3,448.15 in the bank.