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On Olga's 16th birthday, her uncle invested $2,000 in an account that was locked into a 1.75% interest rate, compounded monthly. How much will Olga have in the account when she turns 18? Round to the nearest cent.


Answer is NOT $2,071.19

I can't figure it out, the only answer I get when putting the numbers into the formula is $2,071. I feel like the trick is the "locked" part. Although that seems normal. 16-17 is 1 year, and 17-18, is another, so 2 years. I'm not sure why the answer is wrong.

Respuesta :

ANSWER IS: 2070.6
Step one:
given data
principal p= $2000
Rate r= 1.75% = 0.0175
time t= 18-16= 2years
> 8
~ 2.5
Required
The final amount of the compounded
principal
The compound interest formula is
A=P(1+r)^t
A=2000(1+0.0175)^2
A=2000(1.0175)^2
A=2000*1.0353
A=2070.6

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