If you put $10,000 in an investment that returns 11 percent compounded monthly what would you have after 10 years (rounded to nearest $1)?
A) $29,892
B) $27,559
C) $25,486
D) $22,489

Question

Quizplus · Accepted Answer

The formula to calculate compound interest is:

A = P*(1+r/n)^(n*t)

Where, 
A = final amount 
P = principal amount (initial amount invested) 
r = interest rate per annum 
n = number of times the interest is compounded in a year 
t = number of years

Here, P = $10,000, r = 11% per annum (or 0.11), n = 12 (as interest is compounded monthly), and t = 10 years.

Plugging these values in the formula:

A = 10,000*(1+0.11/12)^(12*10)
A = 10,000*(1.009167)^120
A = $29,892.35

Rounding this to the nearest dollar, we get $29,892.

Hence, the best choice is A.

If You Put $10,000 in an Investment That Returns 11