Interest Problem

[sandreen]

Does this belong in this category? I'm not really sure.

A man deposits 500 in a savings bank. If an interest of 2% is added to the principal at the end of each month how much is the account at the end of 2 years.

I need confirmation. this is a compound interest question right? what's the answer?
794.16? (that was computed manually ) how do you solve it?

Thanks for your time!

 

[Deleted member 4993]

Does this belong in this category? I'm not really sure.

A man deposits 500 in a savings bank. If an interest of 2% is added to the principal at the end of each month how much is the account at the end of 2 years.

I need confirmation. this is a compound interest question right? what's the answer?
794.16? (that was computed manually ) how do you solve it?

Thanks for your time!

Using compound interest formula

A = P*(1+r)^n = 500*(1.02)^24 = 804.22

 

[Denis]

I need confirmation. this is a compound interest question right? what's the answer?
794.16? (that was computed manually ) how do you solve it?

To compute manually, you need to multiply 1.02 by 1.02 by 1.02 by 1.02....
(total of 23 multiplications) which will result in 1.608437....

That really is the result if $1 had been invested (not $500);
so for $500: 500 * 1.608437... = 804.22 ; kapish?