Question

If $5000 is deposited into an account which pays 6% compounded

monthly, approximately how much money will be in the account at the
end of 8 years?

Answer 1

The amount in the account at the end of 8 years is about $8070.71.

Explanation:

Given information:

Principal = $5000

Interest rate = 6% = 0.06 compounded monthly

Time = 8 years

The formula for amount after compound interest is

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

where,

P is principal.

r is rate of interest.

n is number of times interest compounded in a year.

t is time in years.

Substitute P=5000, r=0.06, n=12 and t=8 in the above formula.

`A=5000(1+(0.06)/(12))^((12)(8))`

`A=5000(1.005)^(96)`

`A=5000(1.61414270846)`

`A=8070.7135423`

`A\approx 8070.71`

Therefore the amount in the account at the end of 8 years is about $8070.71.