Question

Investing 10,000
in a savings account at 3%
annual interest compounded monthly will result in approximately how much money after 10
years?

Use the formula: a=p(1+r/m)mt

Answer 1

Use A = P(1 + r/m)^{mt} with P = 10000, r = 0.03, m = 12, t = 10.

A = 10000(1 + 0.03/12)^{12·10} = 10000(1.0025)^{120} ≈ 10000(1.349355) ≈ $13,493.55.

So you'll have about $13,494 after 10 years.