Question

How much money invested at 3% compounded monthly for 3 years will yield $520?

Answer 1

Answer:

Step-by-step explanation:

Use this formula:

$A(t)=P(1+\frac{r}{n})^{nt}$ where A(t) is the amount after the compounding is done, P is the initial investment (our unknown), r is the interest rate in decimal form, n is the number of compoundings per year, and t is the time in years. Filling in:

$520=P(1+\frac{.03}{12})^{(12)(3)}$ and simplifying that a bit:

$520=P(1+.0025)^{36$ and a bit more:

$520=P(1.0025)^{36$ and even  bit more:

520 = P(1.094551401) and divide to get

P = $475.30