Question

Find the balance in the account
$2,550 at 3% compound interest for 18 months

A. $2,664.75
B. $2,665.61
C. $2,665.61
D. $2,689.35

Answer 1

3%/12 will give you the interest rate per month

but is this spose to be compounded every 18 months? or compounded monthly, for 18 months?

Answer 2

compounded monthly for 18 months.

Answer 3

that makes more sense

well, the interest rate is given at an annual amount; so divide by 12 to get a monthly interest rate. then its just a matter of taking the principal and running it thru 18 periods of interest

r = .03/12

A = P(1.r)^(18)