Problema Solution
assume you invest $5000 in an account paying 8% interest compounded monthly. how much money will be in the account after 5 years?
Answer provided by our tutors
P = $5,000 the principal invested
r = 0.08 or 8% annual interest rate
t = 5 years
n = 12*t = 12*5 = 60 compounding periods (the account is compounded motnhly)
A = future value
A = P(1 + r/12)^n
A = 5000(1 + 0.08/12)^60
by calculating we find:
A = $7,449.23
click here to see the step by step calculation:
after 5 years there will be $7,449.23 in the account.