If sally invests $400 into the Bank of Reyonds that offers her a 6% interest, compounded monthly, how much money will she have in the bank in 5 years?

Question

asked Feb 13, 2022 84.0k views

1 Answer

ARZMI Imad · Answer 1 · 2022-02-19T21:09:47+0000

Given:

Principal = $400

Rate of interest = 6% compounded monthly

Time = 5 years.

To find:

The amount in the bank after 5 years.

Solution:

The formula for amount is:

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

Where, P is principal, r is the rate of interest, n is the number of time interest compounded in an year and t is the number of year.

Interest compounded monthly. So,
n=12 .

Putting
P=400, r=0.06, n=12 and
t=5 , we get

$A=400\left(1+(0.06)/(12)\right)^(12(5))$

$A=400\left(1+0.005 \right)^(60)$

$A=400\left(1.005 \right)^(60)$

$A\approx 539.54$

Therefore, the amount of money in the bank after 5 years is $539.54.