Question

Here is the question on compound interest. It is not graded, but is bugging me because I can't figure it out. After the third year, $2662 was in Samantha's account. If the account continues to earn 10% interest, how much money will be in the account (1)after the tenth year and (2) after the twentieth year? Round answers to the nearest cent. I need to know the steps to the problem, because I have to have the steps down to do the next part. Help

Answer 1

Here is the question on compound interest. It is not graded, but is bugging me because I can't figure it out. After the third year, $2662 was in Samantha's account. If the account continues to earn 10% interest, how much money will be in the account (1)after the tenth year and (2) after the twentieth year? Round answers to the nearest cent. I need to know the steps to the problem, because I have to have the steps down to do the next part. Help

S = P(1 + i)^n where S = the accumulated sum, P = the principal, or amount invested, i = the annual interest rate divided by 100n and n = the number of interest bearing periods.

If the interest is compounded annually,
S = 2662(1 + .10)^10 = $6904.54 after 10 years.
S = 2662(1 + .1) ^20 = $17,908.60 after 20 years.

If the interest is compounded monthly,
S = 2662(1 + .1/12)^120 = $7206.14 after 10 years
S = 2662(1.08333)^240 = $19,507.33 after 20 years.