Tommy is saving up money to buy a car. Tommy puts $6,000.00 into an account which earns 4% interest, compounded monthly. How much will he have in the account after 6 years?
Use the formula A=P1+
r
n
nt, where A is the balance (final amount), P is the principal (starting amount), r is the interest rate expressed as a decimal, n is the number of times per year that the interest is compounded, and t is the time in years.
Round your answer to the nearest cent.
A = P(1 + r/n)^(n*t)
A = 6000(1 + 0.04/12)^(12*6)
A = 6000(1 + 0.00333333)^(72)
A = 6000(1.00333333)^(72)
A = 6000(1.266031)
A = $7,596.19
Tommy will have $7,596.19 in the account after 6 years.