Question

Connie invested $3,250 in a regular savings account that

paid compound interest at a rate of 7.5% per year,
compounded monthly. How much was her investment worth
in five years?
$14,625
$1,218.75
$4,468.75
$243.75
$4,723.21​

Answer 1

$4,723.21​

Explanation:

Formula for COMPOUND INTEREST:

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

Where A = principal money + interest earned,

P = Principal Money

r = interest rate in decmial

n = no. of times i.rate is compounded

nt = time

Since the qns asked to be compounded /monthly', you have the following formula:

A = 3250 ( 1 + 7.5%/12) ^ 60

7.5% is a yearly rate so divide it by 12 (as in 12 months)

60 = 5 years x 12 months

so use a calculator and you'll get $4723.206, round off and it's $4723.21