Question

John invests $250 at 15% interest compounded monthly. How much will he have in 20 years?

Answer 1

Answer:

$4928.87

General Formulas and Concepts:

Pre-Algebra

Order of Operations: BPEMDAS

1. Brackets
2. Parenthesis
3. Exponents
4. Multiplication
5. Division
6. Addition
7. Subtraction

• Left to Right

Algebra I

Compounded Interest Rate Formula: $\displaystyle A = P(1 + \frac{r}{n})^{nt}$

• P is principle amount
• r is rate
• n is compound rate
• t is time

Step-by-step explanation:

Step 1: Define

Identify variables

P = 250

r = 15% = 0.15

n = 12

t = 20

Step 2: Solve

1. Substitute in variables [Compounded Interest Rate Formula]:                     $\displaystyle A = 250(1 + \frac{0.15}{12})^{12 \cdot 20}$
2. [Exponents] Multiply:                                                                                        $\displaystyle A = 250(1 + \frac{0.15}{12})^{240}$
3. (Parenthesis) Divide:                                                                                        $\displaystyle A = 250(1 + 0.0125)^{240}$
4. (Parenthesis) Add:                                                                                            $\displaystyle A = 250(1.0125)^{240}$
5. Evaluate exponents:                                                                                         $\displaystyle A = 250(19.7155)$
6. Multiply:                                                                                                             $\displaystyle A = 4928.87$