Question

What is the accumulated value of the money is compounded monthly?

Answer 1

Given: An investment of $20000 for 6 years at 5.5%.

Required: To determine the accumulated value of the money is compounded monthly.

Step-by-step explanation: The formula for compound interest is-

`A=P(1+(r)/(n))^(nt)`

where n is the number of times, interest is compounded in a year. Here we have-

`\begin{gathered} P=20000 \\ n=12 \\ t=6 \\ r=0.055 \end{gathered}`

Substituting the values into the formula as-

`A=20000(1+(0.055)/(12))^(12*6)`

Further solving-

`A=\text{\$}27,798.40`

Final Answer: The accumulated value of the money is $27,798.40