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Answer:
$654.32 (to the nearest cent)
Step-by-step explanation:
Compound interest is based on the principal amount and the interest that accumulates on it in every period.
Monthly Compound Interest formula:
[tex]CI = P(1 + (\frac{r}{n} ))^{nt} - P[/tex]
where:
P = principal amount
r = annual interest rate (as a decimal)
n = frequency or number of times the interest is compounded annually
t = overall tenure in years
So for this problem:
P = 500
r = 9 ÷ 100 = 0.09
n = 12
t = 3
Therefore,
Compound Interest = [tex]P(1 + (\frac{r}{n} ))^{nt} - P[/tex]
= 500 x (1 + (0.09/12))^(12 x 3) - 500
= 500 x (1.0075)^36 - 500
= 154.3226855
So the value of the $500 investment = principal amount + compound interest
= 500 + 154.3226855
= $654.32 (to the nearest cent)