Question

If I invested $4500 at 10% compounded monthly. How much would be in the account in 3 years? Round to nearest cent

Answer 1

$6,066.82

Explanation:

Lets use the compound interest formula provided to solve this:

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

P = initial balance

r = interest rate (decimal)

n = number of times compounded annually

t = time

First, change 10% into a decimal:

10% ->
`(10)/(100)` -> 0.10

Since the interest is compounded monthly, we will use 12 for n. Lets plug in the values now:

`A=4,500(1+(0.10)/(12))^(12(3))`

`A=6,066.82`

The balance after 3 years will be $6,066.82