Find the amount of money in an account after 5 years if $2800 is deposited at 7% annual interest compounded monthly.
A) $3969.35
B) $3961.38
C) $3949.68
D) $3927.14

Question

Quizplus · Accepted Answer

The amount of money in an account after a certain period with compound interest is calculated using the formula A = P(1 + r/n)^(nt), where A is the amount of money accumulated after n years, including interest, P is the principal amount (the initial amount of money), 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. For this problem, P = $2800, r = 7% or 0.07, n = 12 (since the interest is compounded monthly), and t = 5 years. Plugging these values into the formula gives A = 2800(1 + 0.07/12)^(12*5) = $3969.35.

Find the Amount of Money in an Account After 5