Question

Willy has compounded monthly to invest his summer earnings of $4259 in the

Rock Solid Bank. The bank is offering 6%. Willy plans to use the money to go to
college in 5 years. How much will he have in 5 years?

Answer 1

We have been given that Willy has compounded monthly to invest his summer earnings of $4259 in the Rock Solid Bank. The bank is offering 6%. We are asked to find the amount of money will be after 5 years.

We will use compound interest formula to solve our given problem.

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

A = Final amount after t years,

P = Principal amount,

r = Annual interest rate in decimal form,

n = Number of times interest is compounded per year.

t = Time in years.

`6\%=(6)/(100)=0.06`

Since interest is compounded monthly, so
`n=12` and
`P=4259`.

`A=\$4259(1+(0.06)/(12))^(12\cdot 5)`

`A=\$4259(1+0.005)^(60)`

`A=\$4259(1.005)^(60)`

`A=\$4259(1.3488501525493161)`

`A=\$5744.752799707\approx \$5744.75`

Therefore, Will will have approximately
`\$5744.75` in 5 years.