Question

Dave has 8000 to invest for 15 years. He finds a bank that offers an interest rate of 3.1% compounded monthly. How much money will he have after 15 years?

Answer 1

Answer: he will have $12720 after 15 years

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 = $8000

r = 3.1% = 3.1/100 = 0.031

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

t = 15 years

Therefore,

A = 8000(1 + 0.031/12)^12 × 15

A = 8000(1 + 0.00258)^180

A = 8000(1.00258)^180

A = $12720