Question

$5000 was invested into an account that earns an annual rate of 4.75%. If money is compounded monthly, how much will the account be worth after 3 years?

Answer 1

$5764.14

Explanation:

The future value formula is useful here.

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

where P is the principal invested, r is the annual rate, n is the number of times per year interest is compounded, and t is the number of years.

FV = $5000(1 +.0475/12)^(12·3) = $5764.14

The account will be worth $5764.14 after 3 years.