## $700 principal earning 5%, compounded monthly, after 9 years

November 16, 2019// Blog//

Hey there! Hello!

For this problem, take the interest equation into account: . is the interest, is the principal amount that will be invested, is the rate of interest per year (expressed in decimal form, where 90% is 0.9, for example), and is the amount of time. Let’s solve the amount of money gained from interest after one year:

That means 2 dollars are earned after one year. If $102 is the total after one year, and interest is earned yearly, it surely can’t be $102 at the end of five years. So, let’s solve for five years this time:

So, at the end of five years, $110 will be earned. This is more than $102 dollars, meaning that your first answer choice is the correct one.

Hope this helped you out! Feel free to ask me any additional questions you may have. 🙂