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

compound and interest Using the below values please calculate the amount accumulated (future value) *Initial principal=$2000 *Interest Rate=9% *Number of years 7 *Monthly compounding

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**MathMate**, Wednesday, April 13, 2011 at 11:37pm
For 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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