Question

Write a compound interest function to model the following situation. then find tbe balance after the given number of years.

$5,400 invested at a rate of 2.4%, compounded monthly; 5 years

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Answer 1

`\$6,087.75`

Explanation:

we know that

The compound interest formula is equal to

`A=P(1+(r)/(n))^(nt)`

where

A is the Final Investment Value

P is the Principal amount of money to be invested

r is the rate of interest in decimal

t is Number of Time Periods

n is the number of times interest is compounded per year

in this problem we have

`t=5\ years\\ P=\$5,400\\ r=0.024\\n=12`

substitute in the formula above

`A=\$5,400(1+(0.024)/(12))^(12*5)`

`A=\$5,400(1.002)^(60)=\$6,087.75`