Problema Solution
An initial deposit of $10,000 earns 6% interest, compounded monthly. How much will be in the account after 6 years? (Round your answer to the nearest cent.)
Answer provided by our tutors
we need to find the compound amount A after 6 years
A = P(1 + i)^n
P = $10,000 is the principal
r = 0.06 (6%) is the annual interest rate
m = 12 is the number of compounding periods per year
t = 6 years is the number of years
n = m*t = 6*12 = 72 the number of compounding periods
i = r/m = 0.06/12 = 0.005 the interest rate per period
A = 10000(1 + 0.005)^72
A = $14,320.44 to the nearest cent
after 6 years the account will have $14,320.44.