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Popular Word Problems >

Lila opened a savings account and deposited 500.00 as principal. The account earns 14% interest, compounded monthly. What is the balance after 10 years?

Solution

L i l a o p e n e d a s a v in g s a cco u n t an d d e p os i t e d 500.00 a s p r in c i p a l . T h e a cco u n t e a r n s 14% in t eres t, co m p o u n d e d m o n t h l y . Wha t i s t h e ba l an ce a f t er 10 ye a rs ?

Solution

Amount : 2011.24

Solution steps

Translate the problem into an equation:

A = 500 (1 + \frac{0.14}{12})^{12 \cdot 10}

500 (1 + \frac{0.14}{12})^{12 \cdot 10} = 2011.23532 \dots

Round to the nearest hundredth:

2011.24

Amount : 2011.24

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