1. A student gets a summer job and she’ll receive a paycheck on the last day of the month in June, July, and August. If she immediately puts $ 100 each month into a savings account that pays 3% annual interest, but compounded monthly, how much money will accumulate in her account by the end of November when she’s ready to do her Christmas shopping?

Answer: She will have $302.76

Step-by-step explanation:

A = P (1+i) ⁿ

3% annual interest = 3/12 = 0.25% p. m.

we have to solve this month by month because of the amount she is going to add.

So, by the end of July, using her June money, she will have

P = 100

n = 1

A = 100 (1+0.0025) ¹ = 100.25

by the end of August, using her June and July money, she will have:

P = 100 + 100.25 = 200.25

n = 1

A = 200.25 (1+0.0025) ¹ = 200.50

by the end of november she will have

P = 200.50+100 = 300.50

n = 3

A = 300.50 (1+0.0025) ³ = 302.76