Chapter 9, Problem 50SGR

To determine

Find the final amount will get after 10 years.

Answer to Problem 50SGR

The final amount after 10 years will be $3053.

Explanation of Solution

Given:

Find the final value of $2500 invested at an interest rate 2% compounded monthly for 10 years.

Concept Used:

Compound Interest Formula: $\text{A}=P{(1+\frac{r}{n})}^{nt}$

A = amount accumulated

P = Principal

R = interest rate

N = compounding per period

T = number of period in years.

Calculation:

$2500 into an account with a 2 % interest rate compounded monthly for 10 years.

Compound Interest Formula: $\text{A}=P{(1+\frac{r}{n})}^{nt}$

  $\begin{array}{l}$ \text{A}=P{(1+\frac{r}{n})}^{n·t}$P=\$2500;r=2\%=0.02;n=12;t=10\text{years}.\\ $ \text{A}=2500·{(1+\frac{0.02}{12})}^{12·10}=2500·{(1+\frac{0.02}{12})}^{120}=\$3053$\end{array}$

Thus, the final amount after 10 years will be $3053.