If you invest this money ($7,185.51 ) in an account that compounds monthly with an APR of 2.5%, how much will you have saved i) after 1 year? ii) after 3 years?

Question

asked Oct 6, 2023 131k views

1 Answer

Vixed · Answer 1 · 2023-10-13T10:45:10+0000

Step-by-step explanation:

The principal is given below as

The APR is given below as

$r=2.5\%=(2.5)/(100)=0.025$

Concept:

To figure out the the compund interest, we will use the formula below

For one year, we will have the amount be

$\begin{gathered} A=P(1+(r)/(n))^(nt) \\ n=12,t=1 \end{gathered}$

By substituting the values, we would have

$\begin{gathered} A=P(1+(r)/(n))^(nt) \\ A=7185.51(1+(0.025)/(12))^(1*12) \\ A=7,185.51(1+(0.025)/(12))^(12) \\ A=7367.22 \end{gathered}$

Hence,

The amount ave after 1 year will be

To calculate the amount for three years, we will have

$\begin{gathered} A=P(1+(r)/(n))^(nt) \\ n=12,t=3 \\ \end{gathered}$

By substituting the values, we will have

$\begin{gathered} A=P(1+(r)/(n))^(nt) \\ A=7185.51(1+(0.025)/(12))^(3*12) \\ A=7,185.51(1+(0.025)/(12))^(36) \\ A=7744.54 \end{gathered}$

Hence,

The amount ave after 3 years will be

$\begin{equation*} 7744.54 \end{equation*}$