DANIEL HAS A MONEY MARKET ACCOUNT WITH %1,200. THE BANK OFFERED HIM A SPECIAL RATE OF 5.25% PER MONTH. HOW MUCH MONEY WILL DANIEL HAVE AFTER THE FIRST MONTH?
If he has $1,200 in the account >>
1,200 * 1.0525 = ?
1,263
Right. $1,263
To calculate how much money Daniel will have after the first month, we will use the formula for calculating compound interest:
Future Value = Principal * (1 + Rate/100)^Time
In this case, the Principal (P) is $1,200, the Rate (R) is 5.25%, and the Time (T) is 1 month.
First, we need to convert the rate from a percentage to a decimal by dividing it by 100:
Rate = 5.25/100 = 0.0525
Now we can substitute the values into the formula:
Future Value = $1,200 * (1 + 0.0525)^1
Calculating:
Future Value = $1,200 * (1.0525)^1
= $1,200 * 1.0525
= $1,263
Therefore, Daniel will have $1,263 after the first month.