Question

Will Medal, Please help..

Hiram Callaway deposits $2,350 in an account that earns interest at 3.2% APR compounded monthly. What is his ending balance after five years?

$2,757.16

$2,822.23

$2,425.20

$2,545.14

Answer 1

Let's start by looking at the equation you need to solve this problem. \[A=P(1+\frac{ r }{ n })^nt\]
Look familiar?

Answer 2

Yes, It does. :)

Answer 3

Alright, given the initial amount, $2,350. And the interest rate 3.2% which we have to turn into a decimal so .032. And finally we know we have 5 years. So the above equation turns into;
\[A=2,350(1+\frac{ .032 }{ 12 })^ (12*5)\]
Where 12 is the amount of months in a year.

Answer 4

The 12 under the .032 or the (12*5)? Sorry this is all very new to me..

Answer 5

Both, in the equation I first put up, n represents the number of compounds in a year. And since you are doing compounded monthly, that means every month in 1 year so 12 months.

Answer 6

Oh, I see now. About the ^N*T would you do those first?

Answer 7

You want to get rid of parentheses first, having an exponent outside of parentheses means the quantity inside the parentheses multiplied by that exponent.

Answer 8

So, meaning I would take (1+.032/12) and that turns into 1.02666667 but I would round right? If I'm even doing it right.. Then I would take the (12*5) = 60 then after that I would multiply both of them together?

Answer 9

I wouldn't round unless stated in the directions, or until you have your final answer you can round that. It doesn't show too good, but the (12*5) is supposed to be in the air representing an exponent to the (1+.032/12) so you would do 1.02666667^60

Answer 10

You would evaluate that to 1.17105362 Correct?

Answer 11

Wait. Then you'd take the 2,350*1.17105362 Right?
Then you would find what A is?

Answer 12

I got it now, thank you!