SOLUTION: brad invests 6600 in an account paying 6% compounded monthly how much is in the account after 8 months
A. 6861.43
B. 10,519.40
C. 6868.67
D. 6621.98
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Question 1120448: brad invests 6600 in an account paying 6% compounded monthly how much is in the account after 8 months
A. 6861.43
B. 10,519.40
C. 6868.67
D. 6621.98
Answer by greenestamps(13200) (Show Source): You can put this solution on YOUR website!
The annual interest rate is 6%; the monthly interest rate is 1/12 of that, which is 0.5%, or 0.005. So the investment grows by a factor of 1.005 8 times; the ending value is
Answer C.
As a multiple choice problem, you can determine the answer with some estimation and a bit of mental arithmetic.
If it were simple interest, 8 months (2/3 of a year) at 6% annual interest would earn 4% interest; 4% interest on $6600 is $264. $264 added to the initial investment is $6864; the final value with compound interest has to be very slightly higher than that.
Only answer C meets that requirement.
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