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September 20, 2014

September 20, 2014

Posted by **George** on Wednesday, April 13, 2011 at 10:37pm.

- Math -
**MathMate**, Wednesday, April 13, 2011 at 11:37pmFor monthly compounding (as opposed to annual), we need to calculate two things:

1. the monthly compounding interest:

annual interest/12=9%/12=0.75%=0.0075

2. the number of periods to cover 7 years

= 7*12 =84 (months)

The future value

= Principal * (1+interest)^periods

= 2000*1.0075^84

= $3746.40

(compare to simple interest

2000*(1+0.09*7)= $3260 < $3746, OK)

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