Question

Rudy Banks has won $5000 to attend university. If he invests the money in an

account at 12% per annum, compounded monthly, how much can he draw monthly
for the next 3 years?

Answer 1

$7153.84

General Formulas and Concepts:

Pre-Algebra

Order of Operations: BPEMDAS

1. Brackets
2. Parenthesis
3. Exponents
4. Multiplication
5. Division
6. Addition
7. Subtraction

• Left to Right

Algebra I

Compounded Interest Rate Formula:
`\displaystyle A = P(1 + (r)/(n))^(nt)`

• P is principle amount
• r is rate
• n is compound rate
• t is time

Explanation:

Step 1: Define

Identify variables

P = 5000

r = 12% = 0.12

n = 12

t = 3

Step 2: Find Interest

1. Substitute in variables [Compounded Interest Rate Formula]:
   `\displaystyle A = 5000(1 + (0.12)/(12))^(12(3))`
2. [Exponents] Multiply:
   `\displaystyle A = 5000(1 + (0.12)/(12))^(36)`
3. (Parenthesis) Add:
   `\displaystyle A = 5000(1.01)^(36)`
4. Evaluate exponents:
   `\displaystyle A = 5000(1.43077)`
5. Multiply:
   `\displaystyle A = 7153.84`