Albert $1000 earned 1.2% annual interest compounded monthly
1 answer:
Answer:
$2159.07
Step-by-step explanation:
The compound interest formula is used to find the balance for the $1000 investment:
A = P(1 +r/n)^(nt)
A = 1000(1 +.012/12)^(12·10) = 1000·1.001^120 ≈ 1127.43
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For a 2% loss, the multiplier of the investment value is 1-.02 = 0.98. The value of the first $500 investment is ...
A = 500(1 -.02) = 490.00
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The continuous compounding formula is used for the second $500 investment.
A = Pe^(rt)
A = 500e^(.008·10) = 500e^.08 = 541.64
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The total value of Albert's investments is ...
$1127.43 +490 +541.64 = $2159.07
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