Question

Use the given information to find the amount A in the account earning compound interest after 6 years when the principal is $3500.T=2.29%, compounded monthlyThe amount after 6 years is $

Answer 1

Hello there. To solve this question, we have to remember some properties about compound interest.

Given the following principal value, interest rate and number of compounding periods per year, we want to determine the amount in the account earning compound interest.

In this case, the values are P = $3500, t = 6 years, n = 365 (compounded daily) and r = 1.83%; The formula is

`A=P\cdot\left(1+(r)/(n)\right)^(nt)`

First, we convert r to decimals dividing the number by 100%

`(1.83\%)/(100)=0.0183`

Hence we get that

`\begin{gathered} A=3500\cdot\left(1+(0.0183)/(365)\right)^(365\cdot6) \\ \end{gathered}`

We get that this is approximately equal to

`\begin{gathered} A\approx3500\cdot1.0000501369863013698630136986301^(2190) \\ \\ A\approx\$3.906,18 \\ \end{gathered}`

This is the result of this compound interest.