Question

How much money is earned by investing $10,000 for 5 years and 3 months at 3 1/5% annual interest, compounded monthly?

(I know how to do this but how do you put "5 years and 3 months" into a formula and how do you add it up to make 525?)

^^^^^^^^^

Answer 1

Actually, The top answer is wrong... The answer would be $1,826.72 ( Sorry...not trying to be rude or anything)

Step-by-step explanation: I know this because it's a gradpoint answer.

Answer 2

`\$11,826.72`

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

`P=\$10,000\\n=12`

`t=5\ years\ 3\ months=5+(3)/(12)=5.25\ years`

`r=3(1)/(5)\%=(3+(1)/(5))\%=3.2\%=3.2/100=0.032`

substitute in the formula above

`A=10,000(1+(0.032)/(12))^(12*5.25)`

`A=10,000((12.032)/(12))^(63)`

`A=\$11,826.72`