Question

Determine the balance at the end of 3 months if 6% interest is compounded monthly on a savings account that started with $300,
چا
(a) $304.53
(b) $310.21
(e) $340.35
(d) $302.00​

Answer 1

Answer:

A option $304.53 is the right answer

Answer 2

Concept:

Compound interest is the interest calculated on the principal and the interest accumulated over the previous period. It is different from simple interest, where interest is not added to the principal while calculating the interest during the next period. In Mathematics, compound interest is usually denoted by C.I.

Compound interest finds its usage in most of the transactions in the banking and finance sectors and other areas. Some of its applications are:

Increase or decrease in population.

The growth of bacteria.

Rise or Depreciation in the value of an item.

Amount=P(1+r/100)ⁿ

Given:

3 months if 6% interest is compounded monthly on a savings account that started with $300,

Find:

Determine the amount

Solution:

Amount=P(1+r/100)ⁿ

            =300(1+6/100)³

             =300 x (1.06)³

              =$357.3048

Therefore the amount at the end of three months will be $357.3048

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