Answer
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A = 1,074.42
↓Steps Explained:↓
How much is 1000 worth after 12 months
using an annual interest rate of 7.2%
compounded monthly?
Calculate effective interest rate
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
Calculate Accumulated Balance
A = B(1 + i)n
where A = accumulated balance
B = opening balance
i = Monthly interest rate
and n = number of periods
Plugging in our values
A = 1,074.42
A = 1000(1.006)12
A = 1000(1.0744241677219)
How much interest was earned?
Interest Earned = Accum. Value - Start Balance
Plug in our values
Interest Earned = 1,074.42 - 0.00
Interest Earned = 1,074.42
1074.42
Final Answer
A = 1,074.42Take the Quiz
Related Calculators: Rule of 72 | Effective Annual Yield Rate | Approximations of Interest Rate