Question

If $2,000 is invested at 6% compounded monthly, what is the amount after 5 years?

Answer 1

Remember 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 the number of Time Periods

n is the number of times interest is compounded per year

in this problem we have

P=$2,000

t=5 years

r=6%=6/100=0.06

n=12

substitute the given values in the above formula

`\begin{gathered} A=2,000(1+(0.06)/(12))^(12*5) \\ \\ A=\$2,697.70 \end{gathered}`

therefore

The answer is $2,697.70