Question

Suppose that $2000 is invested at a rate of 3.9%, compounded monthly. Assuming that no withdrawals are made, find the total amount after six years.Round your answer to the nearest cent.

Answer 1

Compound interest formula:

`\begin{gathered} A=P(1+(r)/(n))^(nt) \\ \\ A\colon\text{Amount} \\ P\colon\text{ Principal} \\ r\colon\text{ interest rate (in decimals)} \\ n\colon\text{ number of times interest is compounded in a year} \\ t\colon\text{ time (in years} \end{gathered}`

Given data:

P= $2,000

r= 3,9% =0.039

n=monthly= 12

t= 6 years

`\begin{gathered} A=2000(1+(0.039)/(12))^(12(6)) \\ \\ A=2000(1.00325)^(72) \\ \\ A\approx2526.33 \end{gathered}`

Then, the total amount after six years is $