Question

calculate the compund interest monthly for 12 months. the deposit is 5,000 and the annual percenatge rate is 5%

Answer 1

Answer:

255.81

Explanation:

We have the formula to calculate the monthly compound interest as following:

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

In which:

+) A: Amount of compound interest

+) P: Principle, the initial deposit

+) r: the percentage rate

+) n: the number of month (if monthly: n =12, quarterly => n = 3, etc.)

+) t: number of years

From that we have: P = 5,000; r = 5% = 0.05; n = 12 months and t = 1

So that the compound interest monthly for 1 year of 12 months is:

$A = 5000 . (1+\frac{0.05}{12})^{12.1} - 5000 = 255.81$

So that the answer is 255.81