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Math Help - Compounded monthly

  1. #1
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    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
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  2. #2
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    Re: Compounded monthly

     A = 800\left( 1 + \frac{0.08}{12} \right)^{24} =938.31
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  3. #3
    MHF Contributor ebaines's Avatar
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    Re: Compounded monthly

    ^This.

    Quote Originally Posted by itgl72 View Post
    I keep getting the answer $933.12 which is wrong.
    What you calculated was for interest compunded annually (not monthly) for two years:  800 \left(1+\frac {0.08} 2 \right)^2 = 933.12. Scopur shows how to do it compounding monthly.
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  4. #4
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    Re: Compounded monthly

    Quote Originally Posted by itgl72 View Post
    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 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 \frac{.08}{12}= 0.006667.
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