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Math Help - Exponential Functions- Finance

  1. #1
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    Exponential Functions- Finance

    Determine the amount of money in a savings accounts that provides an annual rate of 4% compounded monthly if the initial investment is $1,000 and the money is left in the account for 5 years.

    Can somebody show me how to solve this problem step by step please?
    Thank you SO MUCH!
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  2. #2
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    A = A_0\left(1 + \frac{r}{n}\right)^{nt}

    A = balance of the account at any time t in years

    A_0 = initial deposit

    r = annual interest rate as a decimal

    n = number of compounding periods per year
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  3. #3
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    i keep doing it, but i have an answer sheet and i keep getting the answers wrong! the answer sheet says the answer is $1221.00, but here's what i keep doing:

    A= P ( 1 + r/n) ^ nt
    A= 1000 (1 + (.04/4) ^ (4 x 5)
    A = 1,000

    What am I doing wrong? Can somebody please help?
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  4. #4
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    Quote Originally Posted by gnarlycarly227 View Post
    i keep doing it, but i have an answer sheet and i keep getting the answers wrong! the answer sheet says the answer is $1221.00, but here's what i keep doing:

    A= P ( 1 + r/n) ^ nt
    A= 1000 (1 + (.04/4) ^ (4 x 5)
    A = 1,000

    What am I doing wrong?
    compounded monthly ... n = 12
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  5. #5
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    Talking

    Quote Originally Posted by gnarlycarly227 View Post
    A= 1000 (1 + (.04/4) ^ (4 x 5)
    A = 1,000

    What am I doing wrong? Can somebody please help?
    Since you don't say or show what you're doing between the first and second lines above, we can't know what you might be doing wrong. But 1.01^{20} should not be evaluating in your calculator to "1"!
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