What is the year-end balance for $1000 deposited at an 8% rate, if the compounding is done monthly?
A)$1,007
B)$1,080
C)$1,083
D)$1,960

Question

Quizplus · Accepted Answer

The formula for calculating compound interest with monthly compounding is:

A = P(1 + r/n)^(nt)

where:
A = the ending amount
P = the principal (starting amount)
r = the annual interest rate (as a decimal)
n = the number of times the interest is compounded per year
t = the time the money is invested (in years)

Plugging in the given values:

A = 1000(1 + 0.08/12)^(12*1)
A = 1000(1.00666667)^12
A = 1000(1.08328707)
A = $1,083.29

Rounding to the nearest dollar gives an answer of $1,083, so the correct choice is C.

What Is the Year-End Balance for $1000 Deposited at an 8