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A $5000 investment pays 3% interest compounded monthly. To the nearest cent, what will be the value of the investment after 10 years?

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Answer:

We can use the formula for compound interest to solve this problem. The formula is:

A = P * (1 + r/n)^(n*t)

where:

A = the amount of money after t years

P = the principal amount (the initial investment)

r = the annual interest rate (as a decimal)

n = the number of times the interest is compounded per year

t = the number of years

In this case, P = $5000, r = 0.03, n = 12 (since the interest is compounded monthly), and t = 10. Plugging these values into the formula, we get:

A = 5000 * (1 + 0.03/12)^(12*10)

A = 5000 * (1.0025)^120

A ≈ $6,621.36

So the investment will be worth approximately $6,621.36 after 10 years.

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