l
How much is 1000 worth after 12 months
using an annual interest rate of 7.2%
compounded monthly?
There are 12 months in a year
Convert interest rate to monthly
Monthly Interest = | Annual Interest Rate |
Compounding Periods |
Monthly Interest = | 0.072 |
12 |
Monthly Interest = 0.006
A = B(1 + i)n
where A = accumulated balance
B = opening balance
i = Monthly interest rate
and n = number of periods
A = 1,074.42
A = 1000(1.006)12
A = 1000(1.0744241677219)
Interest Earned = Accum. Value - Start Balance
Interest Earned = 1,074.42 - 0.00
Interest Earned = 1,074.42
1074.42