Final answer:
To calculate the amount you will have in the account in five years, use the compound interest formula: A = P(1 + r/n)^(nt) = $5653.15
Step-by-step explanation:
To calculate the amount you will have in the account in five years, you can use the formula for compound interest:
A = P(1 + r/n)nt
Where:
- A is the total amount after time t
- P is the principal amount (initial deposit)
- r is the annual interest rate (expressed as a decimal)
- n is the number of times interest is compounded per year
- t is the number of years
In this case, the principal amount (P) is $5000, the annual interest rate (r) is 0.03 (3% expressed as a decimal), the number of times interest is compounded per year (n) is 12 (since the interest is compounded monthly), and the number of years (t) is 5.
Plugging in these values, we get:
A = $5000(1 + 0.03/12)(12×5) = $5653.15
Therefore, you will have approximately $5653.15 in the account after five years.