Assume an investment of $7000 earns an APR (Annual Percentage Rate) of 6% compounded monthly for 18 months.
The money in your account after 18 months will be $______.
7524.7
To calculate the final amount of the investment after 18 months, we can use the formula for compound interest:
A = P(1 + r/n)^(nt)
Where:
A = final amount
P = initial principal (investment)
r = annual interest rate (in decimal form)
n = number of times interest is compounded per year
t = number of years
Given:
P = $7000
r = 6% = 0.06 (decimal form)
n = 12 (compounded monthly)
t = 18 months / 12 months/year = 1.5 years
Using the formula, we can calculate the final amount (A):
A = $7000(1 + 0.06/12)^(12*1.5)
Calculating this equation, the money in your account after 18 months will be approximately $7,531.92.
To calculate the final amount of money in the account after 18 months with an APR of 6% compounded monthly, we can use the formula for compound interest:
A = P(1 + r/n)^(nt)
Where:
A = The final amount of money in the account
P = The principal amount (initial investment)
r = Annual interest rate (in decimal form)
n = Number of times the interest is compounded per year
t = Number of years
Now let's plug in the given values into the formula:
P = $7000
r = 6% = 0.06 (in decimal form)
n = 12 (compounded monthly: 12 months in a year)
t = 18/12 = 1.5 years (we convert months to years)
A = 7000(1 + 0.06/12)^(12*1.5)
Now let's simplify and calculate:
A = 7000(1 + 0.005)^(18)
A = 7000(1.005)^(18)
Using a calculator or a spreadsheet, we can find that (1.005)^(18) is approximately 1.092924.
A = 7000 * 1.092924
A ≈ $7644.47
Therefore, the money in your account after 18 months will be approximately $7644.47.