Edgar and Colette deposit 1,000.00 into a savings account which earns 14% interest compounded monthly. They want to use the money in the account to go on a trip in 3 years. How much will they be able to spend?

Solution

Edgar and Colette deposit 1, 000.00 into a savings account which earns 14% interest compounded monthly. They want to use the money in the account to go on a trip in 3 years. How much will they be able to spend?

Solution

Amount : 1518.27

Solution steps

Translate the problem into an equation:

A = 1000 (1 + \frac{0.14}{12})^{12 \cdot 3}

1000 (1 + \frac{0.14}{12})^{12 \cdot 3} = 1518.26599 \dots

Round to the nearest hundredth:

1518.27

Amount : 1518.27

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