Question

Sara invests $4000 at 7.2% annual interest compounded monthly. Find the final amount of Sara's investment after 15 years. *

Answer 1

$8,711.99

Explanation:

The formula for calculating the compound interest in expressed as;

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

Principal P = $4000

r is the rate = 7.2% = 0.072

t is the time = 15years

n = 1/12

Substitute

A = 4000(1+0.072(1/12))^15/12

A = 4000(1+0.072(12))^1.25

A = 4000(1+0.864)^1.25

A = 4000(1.864)^1.25

A = 4000(2.1779)

A = 8,711.99

Hence the final investment after 15years is $8,711.99