The effective annual interest rate may be calculated by,
ieff = (1 + i/m)^m - 1
where i = 6% and m = 12
Substituting the known values to the equation,
ieff = (1 + 0.06/12)^12 - 1 = 0.06168
Solving for the balance of the investment in 5 years,
F = P x (1 + ieff)^n
where P = $8,000 and n = 5
F = $8,000 x (1 + 0.06168)^5 = $10,790
Therefore, the future balance of investment is $10,790.
