Question

You deposit $1,000 in a savings account that earns 0.5% each month. Assuming you do not deposit or withdraw any money from the account, how much money will you have in the account after 3 years?

Answer 1

1) Don't post with no work shown.
2) Insufficient information. We must know the type of the interest crediting.

Answer 2

Alright, my apologies. This problem is solved through geometric sums. So far I have that s3= 1000(1-0.005^3)/(1-.005) and that should come to s3=1000(1)/(.995)

Answer 3

What I got in the end was that I would have $1005.03

Answer 4

I'm not sure if I did the simple operations properly. Could someone help me double check the work?

Answer 5

It is definitely not going to be $1005.03

They are not withdrawing or depositing money for 3 years, and it gains 0.5% each month.

So, $1,000 x 0.005=5
1,000+5=1,005 For the first month

Do you see why 1,005.03 won't be the answer?

Answer 6

It is not solved through sums. There is only one deposit.

Beginning: $1,000.00
Month 1: $1,000.00 * 1.005
Month 2: $1,000.00 * 1.005 * 1.005
etc.

Answer 7

I also that the amount was too small. I followed the formula sn=a1(1-rn)/(1-r), but it wasn't realistic in the end.

Answer 8

So I add for each amount each month?

Answer 9

for a total of 3 years

Answer 10

Nor is it correct. That assumes multiple deposits. You've only one.

Answer 11

Month 2: $1,000.00 * 1.005 * 1.005 = $1.000.00 * 1.005^2
Month 3: $1,000.00 * 1.005^3
Month 4: $1,000.00 * 1.005^4
etc.

These are not separate amounts. This is a single, accumulating deposit. They represent the value at any moment in time. They are NOT to be added up.

Answer 12

Then $1,000(1.005^3) would be the correct amount after accumulating for 3 years left alone

Answer 13

No, that's the MONTHLY rate. You need 36 months.

Answer 14

God forgive my teacher who didn't provide this information. But $1,000(0.005^36)=1.455192E-83? The amount is shrinking

Answer 15

Not 0.005, that is just the monthly interest rate. The monthly accumulation rate is 1 + 0.005 = 1.005. Try again.

Answer 16

Then, $1,000(1.005^3)=$1015.08