Question

You decide to deposit $20,000 into an account that pays 6.5% interest compouded monthly. How much money will you have in the account

after 40 years? (Round to the next dollar) $

Answer 1

Explanation:

The compound interest formula is expressed as;

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

r is the rate

n is the time of compounding

t is the time in years

Given

P = 20,000

r = 6.5% = 0.065

t = 4

n = 1/12

Substitute

A = 20000(1+0.065(12))^40(1/12)

A = 2000(1+0.78)^3.33

A = 20000(1.78)^3.33

A = 20000(6.8218)

A = 136,435.88

Hence $he will have approximately 136,436 in his account after 40years compounded monthly