Question

Cassidy deposited $500 into a money market account that paid 7% interest compounded monthly. How much did she have to the nearest cent when she turned 30? (She is 16 now).

Answer 1

Cash deposited = P = $500
Interest rate = r = 7% = 0.07
Compounding Frequency = n = 12
Time = t = 30 - 16 = 14 years
Amount accumulated = A = ?

Formula to be used:

$A=P(1+ \frac{r}{n})^{nt}$

Using the values, we get:

$A=500(1+ \frac{0.07}{12})^{12*14} =1328.44$

This means, $1328.44 will be her balance at the age of 30.