Pre Cal Math Help!!!

Question

An investment of $5000 is deposited into an account in which interest is compounded monthly. Complete the table by filling in the amounts to which the investment grows at the indicated times. (Round your answers to the nearest cent.)
r = 7%

Answer 1

The formula for this scenario (monthly compounding interest) is:

A = P(1+(r/n))^(nt)

where,

A = the amount in the account

P = the original amount

r = interest rate as a decimal (NOT as a percent!)

n = number of times compounded per year

t = number of years

Therefore, in your scenario, we know the following:

P = $5000

r = 0.07

n = 12 (compounded monthly means 12 times a year)

so your equation is,

A = 5000(1+(0.07/12))^(12t)

At this point, you can just plug in any value for t (as in, the number of years the original $5000 is left in the account to compound monthly).

I did not see a table to complete in your original equation, but I'll get you started with t = 1 year, 2 years, and 3 years...

t = 1 year; A = $5361.45

t = 2 years; A = $5749.03

t = 3 years; A = $6164.63

Hope this helps!