What is the value in 10 years of $10,000 deposited in an account earning 8% compounded monthly?
A) $33,004
B) $22,285
C) $102,530
D) $21,589

Question

Quizplus · Accepted Answer

The formula for compound interest is A = P(1 + r/n)^(nt), where A is the amount of money accumulated after n years, including interest, P is the principal amount ($10,000), r is the annual interest rate (8% or 0.08), n is the number of times that interest is compounded per year (monthly compounding means n = 12), and t is the time the money is invested for in years (10 years). Plugging in the values: A = 10000(1 + 0.08/12)^(12*10) = $22,285.

What Is the Value in 10 Years of $10,000 Deposited