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Question

Use the appropriate compound interest formula to compute the balance in account after the stated period of time. $\$ 4000$ is invested for $20$ years with an APR of $6 \%$ and monthly compounding.

Solution

VerifiedAnswered 1 year ago

Answered 1 year ago

Step 1

1 of 4The goal is to calculate the balance in an account for $20$ years that has $\$4000$ invested at an annual percentage rate of $6\%$ and monthly compounding.

To calculate the balance, apply the *Compound Interest Formula* for interest paid once a year:

$A=P\times \left(1+\dfrac{APR}{n}\right)^{nY}$

where

$A$ is the accumulated balance after $Y$ years. $P$ is the starting principal $APR$ is the annual percentage rate (as a decimal) $n$ is the number of compounding periods per year $Y$ is the number of years

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