If you put $700 in a savings account with a 10% nominal rate of interest compounded monthly, what will the investment be worth in 21 months (round to the nearest dollar)?
A) $827
B) $833
C) $828
D) $1,176

Question

Quizplus · Accepted Answer

The formula for compound interest is A = P(1 + r/n)^(nt), where P is the principal amount ($700), r is the annual nominal interest rate (0.10), n is the number of times interest is compounded per year (12), and t is the time in years (21/12). Plugging in these values gives A = 700(1 + 0.10/12)^(12*(21/12)) = 700(1 + 0.0083333)^21 ≈ $833.

If You Put $700 in a Savings Account with a 10