Question

Please help me with this question thank you

Answer 1

Given:

Deposit = $7500

Rate of interest = 2.75%

Time = 4 years

Compounded monthly

n = 12

To find:

The balance in the account after 4 years

Solution:

Compound interest formula:

$A=P\left(1+\frac{r}{n}\right)^{n t}$

Here P = $7500, r = 2.75%, n = 12 and t = 4.

$A=7500\left(1+\frac{2.75\%}{12}\right)^{12\times 4}$

To convert percentage into fraction, divide by 100.

$A=7500\left(1+\frac{\frac{2.75}{100} }{12}\right)^{48}$

$A=7500\left(1+\frac{0.0275 }{12}\right)^{48}$

$A=7500\left(\frac{12+0.0275 }{12}\right)^{48}$

$A=7500\left(\frac{12.0275 }{12}\right)^{48}$

$A=8371.03$

The balance in his account after 4 years is $8371.03.