Compound Interest, SMB-031

Camilla is considering a term deposit that pays 4.8% interest per annum, compounded monthly.

She calculates that if she invests in the term deposit, her money will be worth $9800 in 2 years' time.

Determine the amount that Camilla is planning to invest, giving your answer to the nearest cent. (2 marks)

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`$8904.65`

Show Worked Solution

`\text{Interest rate}\ (r) = \frac{0.048}{12} = 0.004\ \ \text{(per month)}`

`\text{Compounding periods}\ (n) = 2 xx 12 = 24`