Question

You invest 58,000 into a savings account with a 3.75 annual interest rate that compounds interest monthly find the balanace in the account after eight years

Answer 1

78 255.20

Explanation:

The formula for compound interest is:

A = P(1 + r)ⁿ

Data:

P = 58 000

APR = 3.75 %

t = 8 yr

Calculations:

n = 8 × 12 = 96

r = 0.0375/12 = 0.003 125

A = 58 000(1+ 0.003 125)⁹⁶

= 58 000 × 1.003 125⁹⁶

= 58 000 × 1.349 2275

= 78 255.20

Your balance will be 78 255.20.