compound interest

Question

Find the amount of money accumulated if you invested $25,000 at 4.3% interest for 8 years compounded monthly.

Answer 1

the underlying formula that you want to use here for compound interest is

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

in this case for compounded monthly that means taking

A = 25000(1 + 0.043/12)^(12*8)

A = 35242.79

meaning that you will have approximately $35,242.79 accumulated in your account after 8 years

Answer 2

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

where P = beginning amount, A = ending amount

r= annual interest rate

n= number of compounding periods per year

t = number of years

A=25,000(1+ 0.043/12)^12(8)

A= 25,000(1.00358333...)^96 =$35,242.79

if it had been continuously compounded the formula changes to

A=Pe^rt where e=about 2.71828...

A=25,000e^.043(8)

A =25,000e^.344

A=$35,264.47 rounded off to nearest cent

for "just" monthly compounded, the total is slightly less, about 22.32 dollars less