Question

1 If $5000 is put into a savings account that pays3.5% interest compounded monthly, how muchmoney, to the nearest ten cents, would be in thataccount after 6 years, assuming no money was addedor withdrawn?1) $5177.802) $5941.303) $6146.304) $6166.50 how to solve this?

Answer 1

Answer:

$5,958.18

Explanation:

To get the required amount, we will use the compound interest formula;

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

P is the principal = $5000

r is the rate (in %) = 3.5% = 0.035

n is the compounding period = 1/12 (monthly)

t is the time = 6 years

Substitute into the formula given

A = 5000(1+0.035/(1/12))^(6*1/12)

A = 5000(1+0.035(12))^0.5

A = 5000(1+0.42)^0.5

A = 5000(1.42)^0.5

A = 5000(1.1916)

A = 5,958.18

Hence the amount after 6years is $5,958.18