Find the amount of money in an account after 7 years if $3900 is deposited at 7% annual interest
compounded monthly.
27,300
$ 6,356.98
To find the amount of money in an account after 7 years with monthly compounding interest, we can use the formula for compound interest:
A = P(1 + r/n)^(nt)
Where:
A is the amount of money in the account after t years
P is the principal amount (initial deposit)
r is the annual interest rate (in decimal form)
n is the number of times interest is compounded per year
t is the number of years
In this case:
P = $3900
r = 7% = 0.07 (converted to decimal form)
n = 12 (monthly compounding)
t = 7 years
Let's substitute these values into the formula:
A = 3900(1 + 0.07/12)^(12*7)
Now, we can calculate this expression:
A ≈ 3900(1 + 0.005833)^84
A ≈ 3900(1.005833)^84
A ≈ 3900(1.601031)
Calculating this, we find:
A ≈ $6,244.20
Therefore, the amount of money in the account after 7 years, with $3900 deposited at a 7% annual interest compounded monthly, would be approximately $6,244.20.