Question

if $850 are deposited into an account with a 6% interest rate, compounded monthly, what is the balance after 7 years?
f = $?
f = p(1 + \frac{r}{n})^{nt}
round to the nearest cent.

Explanation:

Step1: Identify given values

$P = 850$, $r = 0.06$, $n = 12$, $t = 7$

Step2: Calculate monthly interest rate

$\frac{r}{n} = \frac{0.06}{12} = 0.005$

Step3: Calculate total compound periods

$nt = 12 \times 7 = 84$

Step4: Substitute into compound formula

$F = 850(1 + 0.005)^{84}$

Step5: Compute the final amount

First calculate $(1.005)^{84} \approx 1.5203696$, then $F = 850 \times 1.5203696 \approx 1292.31416$

Answer:

$\$1292.31$