Zach S.

asked • 05/09/21# Find the amount Erica owes at the end of 3 years if $6000 is loaned to her at a rate of 7% compounded monthly. Use A=P (1+r/n)^nt

I am confused about how I plug in these numbers. When I submit the answer its wrong but it also gives me a hint

"Remember that the exponential function defined by A=P(1+r/n)^nt models the dollars A owed after P dollars are loaned at an annual rate of interest r compounded n times each year for t years. this function is known as the compound interest formula substitute the values into this formula and solve.

## 1 Expert Answer

#
**A=P (1+r/n)**^{nt}

is the formula for compound interest where:

A = final amount

P = principal or the initial amount

r = annual rate

t = number of years

n = the number of time the money is compounded in a year.

e.g. if it is monthly, n=12

If it is quarterly, n=4

If it is semi-annually (twice a year), n=2, etc...

Given:

P=6000

t = 3

n = 12

r = 7% =.07

We are looking for A. Using the formula, we have:

A= 6000(1+.07/12)^{(12)(3)}

A = 6000(1 + .0058333...)^{36}

**A =$7397.55**

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Joel L.

05/09/21