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Popular Word Problems >

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

I f 5, 000 i s in v es t e d a t 8% ann u a l in t eres t co m p o u n d e d m o n t h l y, w ha t i s t h e a cco u n t ba l an ce a f t er 5 ye a rs, a ss u min g n o a dd i t i o na l d e p os i t s or w i t h d r a w a l s a re ma d e ?

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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