Question

Given P = $8945, t= 5 yearsand r= 9% compounded monthly. Is the correct compound interest formula to calculate to the nearest cent to the value of a

Answer 1

For this question, we use the following formula for compounded interest:

`P=a(1+0.09)^(5\cdot12)`

Solving for a we get:

`\begin{gathered} a=(8945)/((1+0.09)^(60)) \\ a=(8945)/((1.09)^(60)) \\ a=50.81 \end{gathered}`