Question

3. Michelle invests $8000 in a money market account that pays 3.25% interest compounded monthly. How much will be in the account after 12 years?
Example:

Answer 1

Okay. This question is almost exactly like the last one you posted.

There's one VERY important difference now:
This question tells us that the interest increases 3.25% every MONTH.
NOT every year.

So, we have to be careful.

~~~~~~~~~~

Here, again, is the equation:

\[y=a (1+b)^{x}\]

Y is the answer to your question.

A is the starting amount of money.
(In this case, it would be 8000.)

B is the percentage of increase, in decimal form.
(In this case, 3.25% would be 0.0325)

X is the number of MONTHS passed.
We have to use MONTHS,
because the interest increases MONTHLY (as the problem says.
12 years = 24 months.

~~~~~~~~~~~

So, once again,
why don't you try plugging in the numbers.

When you have an answer, let me know.

If you have trouble, let me know.

Answer 2

y=8000(1+0.0335)^24

Answer 3

12 yrs is 144 months everyone... 12 months a year times 12 years is 144 months... so the equation should read y=8000(1+0.0335)^144=920024.18

Answer 4

@Mr.Turner
@kingdaddy100

That's right, 12 years is 144 months.

I'm sorry, for some reason, I read 2 years, instead of 12.

Answer 5

i thought it was 3.25% not 3.35%
so the equation is y=8000(1+0.0325)^144=920024.18
so y=800(1.0325)^144
y=80 (100.0388)
y= 8003.104
y=800310.7938

Answer 6

which one is it?

Answer 7

The increase is 3.25%. That's what the problem tells us.

So, the decimal would be .0325

Your equation would be...

y = 8000(1.0325)^144

The parentheses is already taken care of.

We need to take care of the exponent first,
and then multiply.

In the end,
we would have $800,310.79

Answer 8

thanks