Question

Karen opens a savings account with $1500. She deposits $100 every month into the account that has a 0.85% interest rate, compounded annually. If she doesn’t withdraw any money, what will the account balance be in 10 years?

Answer 1

It’s either 22,200 or 1,800 I’m not 100% sure

Answer 2

Formula is $F = \frac{D ((1+\frac{r}{m})^{mt} -1)}{\frac{r}{m} }$

D represents  the amount of a regular deposit

r  represents the annual interest rate  

m  is the number of equal compounding period  

t the time in years,

F is the future value

D = 100, r= 0.85%= 0.0085, m= 1  and t=10

m*t= 1*10 = 10

Plug in all the values in the formula

$F = \frac{100 ((1+\frac{0.0085}{1})^{10} -1)}{\frac{0.085}{1}}$

= 1039.13

Karen opens a savings account with $1500

Already he has 1500

So account balance = 1500 + 1039.13 = $2539.13