To solve this problem we will use the following formula for compounded interest:
[tex]A=A_0(1+r)^t,[/tex]
where A₀ is the initial amount, r is the interest rate as a decimal number, and t is the number of years.
Substituting A₀=800, r=0.7, and t=5 we get:
[tex]A=800(1+0.7)^5.[/tex]
Simplifying the above result we get:
[tex]A=800(1.7)^5=800\cdot14.19857=11358.856\approx11358.86.[/tex]
Answer:
In five years, you should be earning about $11360 per month, because your earnings rise 70% per year, which are added to the earnings of the previous month.
