I need an equation or an answer?

Question

Here's the rub, have friend had a kid. wanna start a little college fund. O.K. here's the problem. 100 dollars, 5% intrest a month for 18 years how much would that be?

Answer 1

1OO (1 + O.O5/12)^12*18

= $245.5O

---------------------------------

explanation of equation:

P(1 + r/t)t*y

P=PRINCIPAL

R=RATE

T=TIMES INTEREST RATE IS COMPOUNDED

  (EX: 5% A MONTH EQUALS 12)

Y=YEARS

*the little arrow ^ is the symbol for having it to be an exponent

----------------------------------

I just finished Algebra II

and we learned about interest rates and such.

----------------------------------

Freds equation on the compound interest is correct.

just the answer is wrong.

He didn't do the order of operations correctly..

Answer 2

If it is compound interest,

Amount = 100 x (1.05)^(18 x 12)

=$3774753.52

If it is simple interest,

Amount = 100 + 0.05(100)(18 x 12)

= 1180

5% interest a month is ALOT. Banks usually give compound interest rates by year not by month.