Question

Suppose that you invest $5873 in an account that earns interest at an APR of 4.4%, compounded monthly. Determine the accumulated balance after 7 years.

Answer 1

Given:
P = $5873, the principal
r = 4.4% = 0.044, the interest rate
n = 12, twelve monthly compoundings in a year
t = 7 years

Note that
n*t = 12*7 = 84
r/n = 0.044/12 = 0.003667

The accumulated balance after 7 years is
A = 5873*(1 + 0.003667)⁸⁴ = $7,986.90

Answer: $7,986.90