Question

Use the compound interest formulas A=P(1+r/n)^nt and A=Pe^rt to solve. Find the accumulated value of $20,000 for 5 years at an interest rate of 6.5% if the money is compounded monthly. What is the accumulated value if the money is compounded monthly?

Answer 1

Given: An investment of $20000 for 5 years at an interest rate of 6.5%.

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

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

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

Here, n=12 as the money is compounded monthly in a year. Also

`\begin{gathered} P=20000 \\ t=5 \\ r=(6.5)/(100) \\ =0.065 \end{gathered}`

Substituting the values into the formula as-

`A=20000(1+(0.065)/(12))^(12*5)`

Further solving-

`A=27,656.35`

Final Answer: The accumulated value is $27,656.35