Find the value of $20,000 left on deposit for 30 years
at an
annual rate of 9% compounded monthly.
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This is a geometric
sequence problem. |
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| Solve | Step |
|
a0 = 20,000 |
a0 = initial value |
| r = 0.09 ÷ 12 = 0.0075 | r = 9% annual rate divided by 12 (monthly is 12 times a year) |
| n = 30 × 12 = 360 | n = number of years times by 12 (monthly is 12 times a year) |
|
a360 = 20,000(1 + 0.0075)360 |
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a360 = 20,000(1.0075)360 » $294,611.52 |
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The account would have $294,611.52 at the end of 30 years. |
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