Question

Leah wants to invest $12,000 in an account that pays 4.5% annualinterest. Answer the questions below. Which equation represents the amount inthe account after t years if the interest in compounded monthly.

Answer 1

Remember that

The compound interest formula is equal to

`A=P(1+(r)/(n))^(nt)`

where

A is the Final Investment Value

P is the Principal amount of money to be invested

r is the rate of interest in decimal

t is the Number of Time Periods

n is the number of times interest is compounded per year

in this problem we have

P=$12,000

r=4.5%=0.045

n=12

substitute

`A=12,000(1+(0.045)/(12))^(12t)`

The answer is option 4