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An account earns an annual rate of 5.4% compounded monthly. If $3,000 is deposited into this account, then after 3 years there is $___. Round your answer to two decimals.

Sagot :

Given:

rate (r) = 5.4% or 0.054 in decimal form

Principal (P) = $3,000

time in years (t) = 3 years

number of conversions per year (m) = 12 (because it says monthly)

Find: future value or maturity value

Solution:

The formula for getting the future value of a compound interest is:

[tex]F=P(1+\frac{r}{m})^{mt}[/tex]

Let's plug in the given data to the formula above.

[tex]F=3,000(1+\frac{0.054}{12})^{12\times3}[/tex]

Then, solve for F or future value.

[tex]\begin{gathered} F=3,000(1.0045)^{36} \\ F=3,000(1.17532999) \\ F\approx3,526.30 \end{gathered}[/tex]

Answer: After 3 years, the deposited money will become $3, 526.30.