Solve the problem.
-If $1250 is invested at a rate of f 8 compounded monthly, what is the balance after 10 years?
A) $1594.31
B) $1031.25
C) $2281.25
D) $2844.31

Question

Solve the problem.
-If $1250 is invested at a rate of f 8  compounded monthly, what is the balance after 10 years? 
A) $1594.31 
B) $1031.25 
C) $2281.25 
D) $2844.31

Quizplus · Accepted Answer

We can use the formula for compound interest to solve this problem:

$A = P \left( 1 + \frac{r}{n} \right)^{nt}$

where:
A = final amount (what we're solving for)
P = principal (initial amount) = $1250
r = annual interest rate = 8%
n = number of times compounded per year = 12 (since interest is compounded monthly)
t = time in years = 10

Plugging in these values, we get:

A = $1250 \left( 1 + \frac{0.08}{12} \right)^{12 \cdot 10} \approx $2844.31

Therefore, the balance after 10 years is approximately $2844.31. The best choice is D.

Solve the Problem. -If $1250 Is Invested at a Rate of F 8