Find the ending balance in an account that opens with $6,950, earns 10.5% interest compounded monthly, and is held for 15 years.
6950*.105=525 is this correct?
Does your answer make sense to you ?
Think about it
Starting with about $7000, in an account for 15 years at about 10% interest and you end up with $525 ??????
Amount = 6950(1 + .105/12)^(15*12)= $ 33344.43
To find the ending balance in the account, we can use the formula for compound interest:
\[ A = P \left(1 + \frac{r}{n}\right)^{nt} \]
where:
A is the ending balance (what we want to find),
P is the principal amount (the initial balance in the account),
r is the annual interest rate (in decimal form),
n is the number of times interest is compounded per year, and
t is the number of years.
In this case, the principal amount (P) is $6,950, the annual interest rate (r) is 10.5% (or 0.105 as a decimal), the interest is compounded monthly (n = 12), and the money is held for 15 years (t = 15).
Substituting these values into the formula, we get:
\[ A = 6,950 \left(1 + \frac{0.105}{12}\right)^{(12 \times 15)} \]
Let's solve this equation to find the ending balance.