A year-end bonus of $21,000 will generate how much money at the beginning of each month for the next year, if it can be invested at 6.36%, compounded monthly? (Round your answer to the nearest cent.)

Answer 1

Hi, Maria I'm Eddie I can help with this interest math problem I begin by showing this equation. It is important to always write all your equations from math, especially business problems.

P(1+r/n)^nt

P = Principal , r = rate , n = number of times compounded , t = time in years

This is a typical problem for a savings account it applies to your current savings account or any fixed investment like a bond. The principal refers to the money you invest or save at time in the beginning in this problem it is $21,000. Rate refers the refering the interest rate a savings account or investment pays in this example it is 6.36%. The number of times compounded is how many times per year typically something is compounded. In this example, savings compound or give interest monthly, and the new money is added in the interest calculation. So in this problem, the principal is compounded 12 times per year.

P= $21,000 , r = .0636 , n = 12 , t = 1

$21,000(1+.0636/12)^12*1 = $22,375.23

Hopefully, that was helpful and you understand let me know if you like further help on this problem or the class have a nice day Maria.