You deposit $3000 in an account earning 2% interest compounded monthly. How much will you have in the account in 5 years?

Answer 1

Start with the compound interest formula:

A(t) = A₀·(1 + rate/n)^nt

1. A(t) = amount of money you have after time t
2. A₀ = initial deposit = $3000
3. rate = interest rate expressed as a decimal = 0.02
4. n = number of compounding per year = monthly = 12
5. t = years = 5

Plug the numbers into the formula, then use your calculator to get the answer.