A principal of $3000 is invested at 5% interest.Find the amount after 20 years if the interest is compounded monthly.
A)$8137.92
B)$8135.92
C)$8139.92
D)$8136.92
E)$8138.92

Question

A principal of $3000 is invested at 5% interest.Find the amount after 20 years if the interest is compounded monthly. ​
A)$8137.92
B)$8135.92
C)$8139.92
D)$8136.92
E)$8138.92

Quizplus · Accepted Answer

The formula for compound interest is $A = P(1 + \frac{r}{n})^{nt}$, where $A$ is the amount of money accumulated after n years, including interest, $P$ is the principal amount, $r$ is the annual interest rate (decimal), $n$ is the number of times that interest is compounded per year, and $t$ is the time the money is invested for in years. Plugging in the given values: $A = 3000(1 + \frac{0.05}{12})^{12*20}$, calculating this gives $A = $8137.92$.

A Principal of $3000 Is Invested at 5% Interest