We appreciate your visit to Suppose you invest tex 3700 tex in an account with an annual interest rate of tex 12 tex compounded monthly tex 1 tex each month. This page offers clear insights and highlights the essential aspects of the topic. Our goal is to provide a helpful and engaging learning experience. Explore the content and find the answers you need!
Answer :
Using the information to complete the table, rounded to the nearest cent as needed, is as follows:
Month Starting Balance 1% Interest on Ending Balance
Starting Balance
1 $3700.00 $37.00 $3737.00
2 $3737.00 $37.37 $3774.37
3 $3774.37 $37.74 $3812.11
4 $3812.11 $38.12 $3850.23
5 $3850.23 $38.50 $3888.73
We can complete the missing parts of the table with the correct calculations, using the formula for monthly compounding interest as follows:
Each month, the interest is calculated by multiplying the starting balance by 1% or 0.01, and then adding that interest to the starting balance to get the ending balance.
Given data:
Starting balance for month 1: $3700
Monthly interest rate: 1% or 0.01
Interest = Starting balance ×0.01
Ending balance = Starting balance + Interest
Now let's compute the remaining missing values.
Month 2:
Starting balance: $3737
Interest: 3737×0.01 = 37.37
Ending balance: 3737 + 37.37 = 3774.37
Month 3:
Starting balance: $3774.37
Interest: 3774.37×0.01 = 37.74
Ending balance: 3774.37 + 37.74 = 3812.11
Month 4:
Starting balance: $3812.11
Interest: 3812.11×0.01 = 38.12
Ending balance: 3812.11 + 38.12 = 3850.23
Month 5:
Starting balance: $3850.23
Interest: 3850.23×0.01 = 38.50
Ending balance: 3850.23 + 38.50 = 3888.73
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