Question

you deposited $5500 in a account that pays 3.6% annual interest. find the balance after 2 years if the interest is compound monthly

Answer 1

$5,909.97

Explanation:

We will use the compound interest formula for this problem as shown below:

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

P = initial balance

r = interest rate (decimal)

n = number of times compounded annually

t = time

First, change 3.6% into a decimal:

3.6% ->
`(3.6)/(100)` -> 0.036

Now plug in the values:

`A=5,500(1+(0.036)/(12))^(12(2))`

`A=5,909.97`

After 2 years, the balance would be $5,909.97