Question

If P=2500, r=6%, and m=12, find the accumulated amount after 5 years. Use the formul: A=P(1+i)^n

Answer 1

Answer:

$3372.13

Explanation:

Given that:

• Principal, P=2500

,

• Interest Rate, r=6%

,

• Number of months, m=12

For an interest compounded m times in a year, we use the formula

$A=P(1+\frac{r}{m})^{mn}\text{ , n=number of years}$

When n=5 years, we have:

$\begin{gathered} A=2500(1+\frac{0.06}{12})^{12\times5} \\ =2500(1+0.005)^{60} \\ =2500(1.005)^{60} \\ =3372.13 \end{gathered}$

The accumulated amount after 5 years is $3372.13