Question

110. Dani has $1,000 in an investment account that earns 3% per year, compounded monthly.

Answer 1

Answer:

The formula of Compound Interest is:

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

where A = Amount

P = Principle

r = rate

n = Number of Compounding per year

t = total number of year

a. For Dani

Here, P = 1000, r = 3% = 0.03, n = 12(monthly), and time = t.

Putting all these values in above formula:

$A = 1000(1+\frac{0.03}{12})^{12\timest}$

⇒ $A = 1000(\frac{12.03}{12})^{12t}$

⇒ $A = 1000(1.0025)^{12t}$