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You deposit $4000 in an account earning 5% interest compounded

monthly. How much will you have in the account in 5 years? Round
your answer to the nearest penny.

1 Answer

4 votes

Final answer:

After 5 years with a $4,000 deposit earning 5% interest compounded monthly, you will have approximately $5,133.43 in the account.

Step-by-step explanation:

To find out how much you will have in your account after 5 years with monthly compounded interest, you can use the compound interest formula: A = P(1 + r/n)nt, where:

  • A is the amount of money accumulated after n years, including interest.
  • P is the principal amount (the initial amount of money).
  • r is the annual interest rate (decimal).
  • n is the number of times that interest is compounded per year.
  • t is the time in years.

In your case:

  • P = $4,000
  • r = 5% or 0.05
  • n = 12 (since interest is compounded monthly)
  • t = 5 years

So, the formula will look like this:

A = 4000(1 + 0.05/12)12*5

Carry out the calculations:

A = 4000(1 + 0.00416667)60

A = 4000(1.00416667)60

A = 4000(1.2833582)

A = $5,133.43

Therefore, after 5 years, you will have approximately $5,133.43 in the account, rounded to the nearest penny.

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