We have been given that Willy has compounded monthly to invest his summer earnings of $4259 in the Rock Solid Bank. The bank is offering 6%. We are asked to find the amount of money will be after 5 years.
We will use compound interest formula to solve our given problem.
[tex]A=P(1+\frac{r}{n})^{nt}[/tex], where,
A = Final amount after t years,
P = Principal amount,
r = Annual interest rate in decimal form,
n = Number of times interest is compounded per year.
t = Time in years.
[tex]6\%=\frac{6}{100}=0.06[/tex]
Since interest is compounded monthly, so [tex]n=12[/tex] and [tex]P=4259[/tex].
[tex]A=\$4259(1+\frac{0.06}{12})^{12\cdot 5}[/tex]
[tex]A=\$4259(1+0.005)^{60}[/tex]
[tex]A=\$4259(1.005)^{60}[/tex]
[tex]A=\$4259(1.3488501525493161)[/tex]
[tex]A=\$5744.752799707\approx \$5744.75[/tex]
Therefore, Will will have approximately [tex]\$5744.75[/tex] in 5 years.
