Karen opens a savings account with $1500. She deposits $100 every month into the account that has a 0.85% interest rate, compounded annually. If she doesn’t withdraw any money, what will the account balance be in 10 years?

Question

Karen opens a savings account with $1500. She deposits $100 every month into the account that has a 0.85% interest rate, compounded annually. If she doesn’t withdraw any money, what will the account balance be in 10 years?

Answer 1

I want you to check your typing.

An interest rate of .85% seems hardly worth it, you are not even getting 1%

Do you want the amount at the end of the 10 years ?

Answer 2

I checked my typing and its correct, that's how it is and yes.

Answer 3

To calculate the future value of Karen's savings account after 10 years, we'll use the formula for compound interest:

Future Value = Principal * (1 + (Interest Rate / Compounding Frequency))^(Compounding Frequency * Time)

In this case, the initial principal is $1500, the interest rate is 0.85%, and the compounding is annual.

Let's break down the calculation step-by-step:

Step 1: Convert the interest rate from a percentage to a decimal:
Interest Rate = 0.85% = 0.0085 (decimal)

Step 2: Determine the number of times interest is compounded per year:
Since the interest is compounded annually, Compounding Frequency = 1

Step 3: Calculate the future value:
Future Value = $1500 * (1 + (0.0085 / 1))^(1 * 10)
≈ $1500 * (1.0085)^(10)
≈ $1500 * 1.089308674
≈ $1633.96

Therefore, the account balance will be approximately $1633.96 after 10 years if Karen doesn't withdraw any money.

Answer 4

To calculate Karen's account balance in 10 years, we can use the formula for compound interest:

A = P(1 + r/n)^(nt)

Where:
A = the final account balance
P = the initial principal (the amount Karen opens the account with) = $1500
r = the interest rate per period, expressed as a decimal = 0.85% = 0.0085
n = the number of times the interest is compounded per year = 1 (since the interest is compounded annually)
t = the number of years the money is invested for = 10

By substituting the values into the formula, we can calculate the final account balance:

A = 1500(1 + 0.0085/1)^(1*10)

First, we need to calculate (1 + 0.0085/1)^(1*10):

(1 + 0.0085/1)^(1*10) = 1.0085^10

Using a calculator or manual calculations, we find that 1.0085^10 ≈ 1.08647.

Now, we can substitute this value back into the main formula:

A = 1500 * 1.08647

Calculating this, we find that Karen's account balance after 10 years will be approximately $1,629.71.