Question

$4500 is deposited for 4.5 years in an account that pays 4.5% interest compounded monthly. What is the value of the account when the customer takes the money at the end of the 4.5 years?

Answer 1

$5507.98

Step-by-step explanation:

To find the value of the account, we use the compound interest formula below:

`Amount\: at\: Compound\: Interest,A=P(1+(r)/(n))^(nt)`

From the given information:

• Principal,P=$4500

,

• Interest Rate, r=4.5%=0.045

,

• Number of compounding periods, n=12 (Monthly)

,

• Time, t=4.5 years

Substituting the given values, we have:

`\begin{gathered} A=4500(1+(0.045)/(12))^(12*4.5) \\ =4500(1+0.00375)^(54) \\ =4500(1.00375)^(54) \\ =\$5507.98 \end{gathered}`

The value of the account when the customer takes the money at the end of the 4.5 years is $5507.98.