Question

In January, you deposit $150 into your checking account. Every month after that, you deposit 10% more than you did the month before. How much did you deposit in August?

Answer 1

Okay. So you deposit $150 in January and 10% more as each month passes by, which if you count, that would be 7 months. When it comes to compound interest, the formula for it is P(1 + r)^t. That means r = interest rate, P = principal, and t = time. In this case, we add 1 to 10% in decimal for. 10% is 0.1 in decimal form. 1 + 0.1 is 1.1. Now, compound 1.1 to the 7th power, because you repeat this 7 times. 1.1^7 is 1.9487171. Don't delete the decimal from your calculator. Now, multiply that decimal by 150 to get the new amount. When you do, you get 292.307565 or 292.31 when rounded to the nearest hundredth. You deposit $292.31 in August.