Question

you deposited $5500 in a account that pays 3.6% annual interest. find the balance after 2 years if the interest is compound monthly

Answer 1

Answer:

$5,909.97

Step-by-step explanation:

We will use the compound interest formula for this problem as shown below:

$A=P(1+\frac{r}{n} )^{nt}$

P = initial balance

r = interest rate (decimal)

n = number of times compounded annually

t = time

First, change 3.6% into a decimal:

3.6% -> $\frac{3.6}{100}$ -> 0.036

Now plug in the values:

$A=5,500(1+\frac{0.036}{12})^{12(2)}$

$A=5,909.97$

After 2 years, the balance would be $5,909.97