Pre Calculus
interest 7%; investment $2000, compounded monthly - how much after 10 years. I am very close on this one but must be missing an important step:
A(t) = 2,000(1 + .07/12)^(10)(12)
A(10) = 2,000(1.0058)^120
A(10) = 2,000(2.0017 = 4003.4
However the answer is actual $4220.29
What have I done wrong??
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Answers
You calculated the amount compounded monthly, not annually. To calculate the amount compounded annually, you should use (1 + .07)^10. Your equation would look like this: A(t) = 2,000(1 + .07)^10 A(10) = 2,000(1.807) A(10) = $3614.14 or A(10) = 2,000(1.807)^1 A(10) = $4220.29
