Question

A

You deposit $3000 into a bank account that pays 1.25% annual interest,
compounded monthly. How much interest does the account earn after 4 years?

Answer 1

1.25 percent of 3000=37.5

37.5 times 4=150

3000-150=2850

Answer 2

The account earns approximately $153.73 in interest after 4 years.

Step-by-step explanation:

We can use the compound interest formula to calculate the interest earned:

A = P * (1 + r/n)^(n*t)

where:

A is the final amount

P is the principal amount ($3000)

r is the annual interest rate (1.25% / 12 = 0.0065)

n is the number of compounding periods per year (12 for monthly)

t is the number of years (4)

Plugging in the values:

A = $3000 * (1 + 0.0065)^^(12 * 4) ≈ $3153.73

Therefore, the interest earned is:

Interest = A - P = $3153.73 - $3000 ≈ $153.73