Question

Assume an investment of $5000 earns an APR of 6% compounded monthly for 16 months. How much money is in your account after 16 months? (Round your answer to the nearest cent.)

Answer 1

To calculate the amount of money in your account after 16 months with an APR of 6% compounded monthly, we can use the formula for compound interest.

Step-by-step explanation:

To calculate the amount of money in your account after 16 months with an APR of 6% compounded monthly, we can use the formula for compound interest. The formula is:

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

Where:

• A = final amount
• P = initial investment
• r = annual interest rate (as a decimal)
• n = number of times interest is compounded per year
• t = time in years

Using the values from the question, we have:

A = 5000(1+(0.06/12))^(12*1.333)

Calculating this expression gives a final amount of approximately $5,267.93.