The present value of the money in your savings acct is $420, and you're receiving 3% annual interest compounded monthly. What is the future value in 2 months?
amount = 420(1.0025)^2 = ....
To calculate the future value of the money in your savings account after 2 months, we can use the formula for compound interest:
πΉπ = ππ(1 + π/π)^(ππ‘)
where:
πΉπ is the future value
ππ is the present value
π is the annual interest rate (as a decimal)
π is the number of compounding periods per year
π‘ is the number of years
In this case, the present value ππ is $420, the annual interest rate π is 3% (or 0.03 as a decimal), the compounding is monthly, so π = 12 (since there are 12 months in a year), and π‘ is 2 months (which we will convert to years by dividing by 12).
Plugging in the values into the formula, we have:
πΉπ = $420(1 + 0.03/12)^(12 * (2/12))
Simplifying the formula:
πΉπ = $420(1 + 0.0025)^2
πΉπ = $420(1.0025)^2
πΉπ = $420 * 1.00500625
πΉπ β $421.25
Therefore, the future value of the money in your savings account after 2 months would be approximately $421.25.