Question

Investing $12,000 in a savings account at 6% annual interest compounded monthly will result in approximately how much money after 5 years?

Answer 1

Compound Interest = $P(1+\frac{r}{100} )^{n}$

where P - Principal

           r - rate of interest

           n - number of years

So, for 5 years, at 6% rate of interest, for the principal 12,000, the compount interest will be

$CI = 12000(1+\frac{6}{100} )^{5}$

$= 12000(\frac{106}{100} )^{5}$

$= 12000(1.06)^{5}$

$= 12000(2) approximately$

= 24000

Amount = Principal + C.I.

              = 12000 + 24000

              = 36000

Hence, after 5 years, the amount will be $36,000 approximately.