Question

list of financial formulas.Lisa invested $5300 in an account that pays an annual interest rate of 2.5%, compounded monthly. Answer each part. If necessary, refer to the(a) Find the amount in the account after one year, assuming no withdrawals are made.Do not round any intermediate computations, and round your answer to the nearest cent.X(b) Find the effective annual interest rate, expressed as a percentage.of a percent.Do not round any intermediate computations, and round your answer to the nearest hundredth%

Answer 1

Given:

Investment = $5300

annual interest rate = 2.5% compounded monthly

The amount A after time t can be computed using the formula:

`\begin{gathered} A\text{ = P\lparen1 + }(r)/(n))^(nt)^ \\ \\ Where\text{ P is the principal} \\ r\text{ is the rate of interest} \\ n\text{ is the number of compounding periods } \\ and\text{ t is the time in years} \end{gathered}`

(a) The amount A after 1 year

Substituting the given values:

`\begin{gathered} A\text{ = 5300\lparen1 + }(0.025)/(12))^(12*1) \\ \text{= \$5434.0288} \end{gathered}`

Answer:

Amount = $5434.03