Regular Compound Interest Formula

Question 2

An amount of $3,750.00 is deposited in a bank paying an annual interest rate of 4 % compounded monthly. Find the balance after 3 years and 2 months.

Solution

Use the regular compound interest formula
A = P ( 1 + r/n ) nt with P = 3750, r = 4/100 = 0.04,
n = 12, and t = 3 + 2/12 = 3 + 1/6 = 19/6.
( Note: t must be in years! )
Therefore,
Solution to Question 2

So, the balance after 3 years and 2 months is approximately $4,255.50.

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