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14 December, 12:12

Michelle opened a savings account for her emergency fund. She deposited $2,000 into her account, which earns 2.10% interest, compounded monthly. How much will she have in the account after 1 year?

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  1. 14 December, 15:56
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    Answer: she will have $2042.4 have in the account after 1 year.

    Step-by-step explanation:

    We would apply the formula for determining compound interest which is expressed as

    A = P (1 + r/n) ^nt

    Where

    A = total amount in the account at the end of t years

    r represents the interest rate.

    n represents the periodic interval at which it was compounded.

    P represents the principal or initial amount deposited

    From the information given,

    P = $2000

    r = 2.1% = 2.1/100 = 0.021

    n = 12 because it was compounded 12 times in a year.

    t = 1 year

    Therefore,

    A = 2000 (1 + 0.021/12) ^12 * 1

    A = 2000 (1 + 0.00175) ^12

    A = 2000 (1.00175) ^12

    A = $2042.4
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