Michelle invests $8000 in a money market account that pays 3.25% interest compounded monthly. How much will be in the account after 12 years

Question

I need help with this problem because i don't understand it please help I'm so lost

Answer 1

Hello Douglas E: We have a two step process: TWO formulas are needed:

Step1: A= P (1 + R)^ (N) (T)

__

N

A= ?

P= $8,000.00

R= 3.25% 0.0325 A= 8,000 (1 + 0.0325) ^(1) (12)

T= 12 ____

N=1 1

= 8,000 (1+ 0.0325)^12

= 8000 (1.467847) ----> After its raised to the twelfth power.

A= $ 11,742.78

Step Two: We use this formula:

A= P + I

11,742.78 = 8,000 + I

-8,000 -8,000 +I

__________________________

$ 3,742.78 = I ----> Interest For the twelve years.

Hope this helps!