Question

In order to purchase a new freezer in 4 years, the Steakhouse Restaurant has decided to deposit $1,700 in an account that earns 2% per year compounded monthly for 4 years. How much money will be in the account in 4 years

Answer 1

Answer:

$ 1844

Explanation:

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

A = Final Amount , P = Principal base, r = Interest rate , t = no. of time periods (usually years) , n = compounding in a time period (annually)

Given : P = 1700 , r = 2% , t = 4 , n =  12

A = 1700 [ 1 + 0.02 / 12 ] ^ (12 x 4)

1700 [ 1 + 0.0017 ] ^ (12 x 4)    

1700 [ 1.0017 ] ^ 48  

1700 [1.0849]

= 1844