Question

You deposit $4000 in an account earning 8% interest compounded monthly. How much will you have in the account in 15 years?

Answer 1

Given:

a.) You deposit $4000 in an account earning 8% interest compounded monthly.

Question: How much will you have in the account in 15 years?

We will be using the following formula:

`\text{ A = P(}1\text{ + }(r)/(n))^(nt)`

Where,

A=final amount

P=initial principal balance = $ 4,000

r=interest rate = 8% = 8/100 = 0.08

n=number of times interest applied per time period = monthly = 12

t=number of time periods elapsed = 15 years

We get,

`\text{ A = P(}1\text{ + }(r)/(n))^(nt)`
`\text{ A = (4,000)(}1\text{ + }(0.08)/(12))^((12)(15))`
`\text{ = (4,000)(1 + }0.00667)^(180)=(4,000)(1.00667)^(180)`
`\text{ = (4,000)(3.30889307445)}`
`\text{ A = 13,235.57229780234 }\approx\text{ \$13,235.57}`

Therefore, in 15 years, you will have $13,235.57 in your account.