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18 December, 19:13

Suppose that you invest $5873 in an account that earns interest at an APR of 4.4%, compounded monthly. Determine the accumulated balance after 7 years.

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  1. 18 December, 23:05
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    Given:

    P = $5873, the principal

    r = 4.4% = 0.044, the interest rate

    n = 12, twelve monthly compoundings in a year

    t = 7 years

    Note that

    n*t = 12*7 = 84

    r/n = 0.044/12 = 0.003667

    The accumulated balance after 7 years is

    A = 5873 * (1 + 0.003667) ⁸⁴ = $7,986.90

    Answer: $7,986.90
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