Question

How much would $500 invested at 6% interest compounded monthly be worth after 4 years? Round your answer to the nearest cent

Answer 1

1) Compound interest formula:
$A = P(1+ \frac{r}{n}) ^{nt}$**
**A = amount, P = principal amount, r = rate, n = # of times interest is compunded every year, t = time(in years)
2) Plug numbers in
$A = (500)(1+ \frac{0.06}{12}) ^{(12)(4)}$
3) Solve
A = 635.24458054

Hope this helped! Good Luck!

Answer 2

The total amount accrued, principal plus interest, with compound interest on a principal of $500.00  is $635.24.

Compound Interest

Given Data

• Principal p = $500

• Rate  r = 6%

• Time t = 4 years

A = P + I where

P (principal) = $500.00

I (interest) = $135.24

Calculation Steps:

First, convert R as a percent to r as a decimal

r = R/100

r = 6/100

r = 0.06 rate per year,

Then solve the equation for A

A = P(1 + r/n)nt

A = 500.00(1 + 0.06/12)(12)(4)

A = 500.00(1 + 0.005)(48)

A = $635.24

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