1. ## Compounded monthly

Getting the wrong answer with this problem.

Find the accumulated value of an account of $800 at 8% compounded monthly for 2 years. I keep getting the answer$933.12 which is wrong.

Im using the formula A=P(1 + r/t) ^nt

2. ## Re: Compounded monthly

$\displaystyle A = 800\left( 1 + \frac{0.08}{12} \right)^{24} =938.31$

3. ## Re: Compounded monthly

^This.

Originally Posted by itgl72
I keep getting the answer $933.12 which is wrong. What you calculated was for interest compunded annually (not monthly) for two years:$\displaystyle 800 \left(1+\frac {0.08} 2 \right)^2 = 933.12$. Scopur shows how to do it compounding monthly. 4. ## Re: Compounded monthly Originally Posted by itgl72 Getting the wrong answer with this problem. Find the accumulated value of an account of$800 at 8% compounded monthly for 2 years.

I keep getting the answer $933.12 which is wrong. Im using the formula A=P(1 + r/t) ^nt There's your problem! The formula is$\displaystyle P(1+ r/n)^{nt}$r is annual interest and you are compounding monthly. If the annual interest is 8%= .08, then the monthly interest is$\displaystyle \frac{.08}{12}= 0.006667\$.