Question

Willy has compounded monthly to invest his summer earnings of $4259 in the

Answer 1

We have been given that Willy has compounded monthly to invest his summer earnings of $4259 in the  Rock Solid Bank. The bank is offering 6%. We are asked to find the amount of money will be after 5 years.

We will use compound interest formula to solve our given problem.

$A=P(1+\frac{r}{n})^{nt}$, where,

A = Final amount after t years,

P = Principal amount,

r = Annual interest rate in decimal form,

n = Number of times interest is compounded per year.

t = Time in years.

$6\%=\frac{6}{100}=0.06$

Since interest is compounded monthly, so $n=12$ and $P=4259$.

$A=\ 4259(1+\frac{0.06}{12})^{12\cdot 5}$

$A=\ 4259(1+0.005)^{60}$

$A=\ 4259(1.005)^{60}$

$A=\ 4259(1.3488501525493161)$

$A=\ 5744.752799707\approx \ 5744.75$

Therefore, Will will have approximately $\ 5744.75$ in 5 years.