Question

If A, dollars are invested at annual interest rate r, compounded

monthly, then after years the account will have grown to
121
A(t) = 40 (1
10 (1 + )"
12
If $2000 is placed into an account eaming 12% annual
interest, compounded monthly, how much will it grow to after
15 years?

Answer 1

$11,991.60

Explanation:

An appropriate formula is ...

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

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

Filling in the given numbers, we have ...

A = $2000(1 +0.12/12)^(12·15) = $2000(1.01^180) ≈ $11,991.60

The account balance after 15 years will be $11,991.60.