Question

A total of $54,000 is invested at an annual interest rate of 5.25%. Find the balance after 6 years if it is compounded monthly.

Answer 1

Using the compound interest formula:

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

Where:

A = Amount

P = Principal = 54000

r = Interest rate = 5.25% = 0.0525

n = Number of times the interest is compounded per year = 12

t = Number of years = 6

So:

`\begin{gathered} A=54000(1+(0.0525)/(12))^(12\cdot6) \\ A\approx73943.18 \end{gathered}`

Answer:

The balance is $73943.18