Problema Solution
Ariana put $37,000 in an educational account on the day her daughter was born. If the account earned 5.35% interest compounded monthly, what was the total in the account when her daughter turned 18? Round the final answer to the nearest cent
Answer provided by our tutors
P = $37,000 the principal
r = 0.0535 or 5.35% interest
m = 12 compounding period per year (compounded monthly)
i = 0.0535/12 interest rate per period
t = 18 years
n = t*m = 18*12 = 216 total number of compounding periods
A = future value
A = P(1 + i)^n
A = 37000(1 + 0.0535/12)^216
........
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A = $597,290
After 18 years the total in the account will be $597,290.