Question

$1500 is invested at a rate of 3% compounded monthly. Write a compound interest function to model this situation. Then find the

Answer 1

Answer:

Equation:  $F=1500(1.0025)^{12t}$

The balance after 5 years is:  $1742.43

Step-by-step explanation:

This is a compound growth problem . THe formula is:

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

Where

F is future amount

P is present amount

r is rate of interest, annually

n is the number of compounding per year

t is the time in years

Given:

P = 1500

r = 0.03

n = 12 (compounded monthly means 12 times a year)

The compound interest formula modelled by the variables is:

$F=1500(1+\frac{0.03}{12})^{12t}\\F=1500(1.0025)^{12t}$

Now, we want balance after 5 years, so t = 5, substituting, we get:

$F=1500(1.0025)^{12t}\\F=1500(1.0025)^{12*5}\\F=1500(1.0025)^{60}\\F=1742.43$

The balance after 5 years is:  $1742.43