Question

You plan on going on vacation and decide to invest $2,875 into an investment fund that compounds your money monthly at 4.2%. How much money will you have to go on your vacation at the end of 3 years of high school?

Answer 1

Answer: you would have $3260 to go on your vacation at the end of 3 years of high school

Step-by-step explanation:

We would apply the formula for determining compound interest which is expressed as

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

Where

A = total amount in the account at the end of t years

r represents the interest rate.

n represents the periodic interval at which it was compounded.

P represents the principal or initial amount deposited

From the information given,

P = $2,875

r = 4.2% = 4.2/100 = 0.042

n = 12 because it was compounded 12 times in a year.

t = 3 years

Therefore,.

A = 2875(1 + 0.042/12)^12 × 3

A = 2875(1 + 0.042/12)^12 × 3

A = 2875(1 + 0.0035)^36

A = 2875(1.0035)^36

A = $3260