Question

Michelle opened a savings account for her emergency fund. She deposited $2,000 into her account, which earns 2.10% interest, compounded monthly. How much will she have in the account after 1 year?

Answer 1

Answer: she will have $2042.4 have in the account after 1 year.

Step-by-step explanation:

We would apply the formula for determining compound interest which is expressed as

A = P(1 + r/n)^nt

Where

A = total amount in the account at the end of t years

r represents the interest rate.

n represents the periodic interval at which it was compounded.

P represents the principal or initial amount deposited

From the information given,

P = $2000

r = 2.1% = 2.1/100 = 0.021

n = 12 because it was compounded 12 times in a year.

t = 1 year

Therefore,

A = 2000(1 + 0.021/12)^12 × 1

A = 2000(1 + 0.00175)^12

A = 2000(1.00175)^12

A = $2042.4