Question

Use the formula below to find the value of $400 invested at 4% interest compounded monthly for 10 years. Step 1:Find the value of each of the following for this problem:

Answer 1

Answer and Explanation:

Given : The value of $400 invested at 4% interest compounded monthly for 10 years.    

To find : The value of each of the following for this problem ?

Solution :

The interest formula is $A(t)=P(1+\frac{r}{n})^{nt}$

Step 1 -

P is the amount invested, P=$400

r is the interest rate, r=4%=0.04

t is the time , t=10 years

n is the number of compounding periods per year, n=12

Step 2 - To find A(10),

Substitute all the values in the formula,

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

$A(10)=400(1+\frac{0.04}{12})^{12\times 10}$

$A(10)=400(1+0.0033)^{120}$

$A(10)=400(1.0033)^{120}$

$A(10)=400(1.490)$

$A(10)=596.33$

Therefore, The amount after 10 year is $596.33.

Answer 2

Answer:

See below

Step-by-step explanation:

Step 1.

P = $400

r = 0.04

t = 10 years

n = 12  ( as there are 12 months in a year).

Step 2.

A(10) = 400(1 + 0.04/12)^12^10

= 400 * 1.00333333^120

= $596.33 to the nearest hundredth (answer).