SOLUTION: please help me solve this equation $1000 is invested at 4% for 3 years. How much will the account be worth if the interest is compounded monthly?

Algebra ->  Algebra  -> Customizable Word Problem Solvers  -> Finance -> SOLUTION: please help me solve this equation $1000 is invested at 4% for 3 years. How much will the account be worth if the interest is compounded monthly?      Log On

Ad: Over 600 Algebra Word Problems at edhelper.com
Ad: Algebra Solved!™: algebra software solves algebra homework problems with step-by-step help!
Ad: Algebrator™ solves your algebra problems and provides step-by-step explanations!

   

Question 200538: please help me solve this equation
$1000 is invested at 4% for 3 years. How much will the account be worth if the interest is compounded monthly?
Answer by jim_thompson5910(21685) About Me  (Show Source):
You can put this solution on YOUR website!



A=p%281%2Br%2Fn%29%5E%28n%2At%29 Start with the compound interest formula


A=1000%281%2B0.04%2F12%29%5E%2812%2A3%29 Plug in p=1000 (the amount invested), r=0.04 (this is the decimal form of 4% interest), n=12 (compounded monthly), and t=3 (3 years)


A=1000%281%2B0.00333333%29%5E%2812%2A3%29 Divide 0.04 by 12 to get 0.00333333 (this value is approximate)


A=1000%281%2B0.00333333%29%5E%2836%29 Multiply the exponents 12 and 3 to get 36


A=1000%281.00333333%29%5E%2836%29 Add 1 and 0.00333333 to get 1.00333333


A=1000%281.1272717%29 Raise 1.00333333 to the 36th power to get 1.1272717


A=1127.2717 Multiply 1000 and 1.127137 to get 1,127.2717


So if you invest $1,000 at an interest rate of 4%, which is compounded 12 times a year for 3 years, the return is about $1,127.27 (which is rounded to the nearest cent)