Question

An amount of $3,750.00 is deposited in a bank paying an annual interest rate of 4 % compounded monthly. Find the balance after 3 years and 2 montl

a. $4,255.50
b. $4,233.50
c. $4,000
d. $42,555.0

Answer 1

The correct answer is A. To find the balance after 3 years and 2 months, use the formula for compound interest.

Step-by-step explanation:

To find the balance after 3 years and 2 months, we need to use the formula for compound interest:

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

Where:

• A is the balance after t years and n is the number of times interest is compounded per year (monthly in this case).
• P is the principal amount (initial deposit).
• r is the annual interest rate (4% expressed as a decimal).
• t is the number of years (3 years and 2 months is approximately 3.17 years).

Plugging in the given values, we have:

A = $3,750(1 + 0.04/12)^(12*3.17)

Simplifying the equation will give us the balance after 3 years and 2 months which is approximately $4,255.50.