If 5,000 is invested at 8% annual interest compounded monthly, what is the account balance after 5 years, assuming no additional deposits or withdrawals are made?

Solution

If 5, 000 is invested at 8% annual interest compounded monthly, what is the account balance after 5 years, assuming no additional deposits or withdrawals are made?

Solution

Amount : 7449.23

Solution steps

Translate the problem into an equation:

A = 5000 (1 + \frac{0.08}{12})^{12 \cdot 5}

5000 (1 + \frac{0.08}{12})^{12 \cdot 5} = 7449.22854 \dots

Round to the nearest hundredth:

7449.23

Amount : 7449.23

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